Input Tax Credit of Fine penalty deficiency in services

This query is : Resolved

P.Harish (Querist)
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28 September 2019 Dear Expert ,
kindly brief about taking Input Tax Credit on Tax Invoices issued by Client charge against deficiency in services, fine or penalty etc.
Can we take credit ?

Kindly advise forthwith
Thanks
P harish

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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28 September 2019 Input Tax Credit on Tax Invoices issued by Client charge against deficiency in services, fine or penalty etc can't be taken as these will not be considered as input service.

P.Harish

P.Harish (Querist)
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29 September 2019 Thanking you sir for reply. Can you please share any reference in this regard

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Udaya Chandran

Udaya Chandran (Expert)
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30 September 2019 When there is any deficiency in services, client issues Debit Note (he credit the ITC taken). This is Credit Note for you. In this case, you can reduce only the output liability to the extent of GST in the debit note issued by the client. There is no ITC involved in this transaction for the supplier.

P.Harish

P.Harish (Querist)
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30 September 2019 Dear Shri U Chandran thanks for reply, but this is not a case. Client has issued separate Tax Invoices for the causes detailed above, think reverse if clients has issued Tax invoice it means that they would have to pay liability apart from regular liability. Awaiting for concrete reply plz.

Udaya Chandran

Udaya Chandran (Expert)
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01 October 2019 As per my opinion, unless there is supply of goods or services, one cannot issue tax invoice. One can issue debit note only when there is deficiency in service/goods. Same is the case for fine/penalty. This is my opinion.