Utilisation of Balance in Electronic Credit Ledger

Abstract

In the pre-GST era, there was a multiplicity of indirect taxes being levied by various authorities, and the cross utilisation of taxes was unavailable. For instance, the levies of the Central Government against the State Government levies were not allowed, which led to cascading taxes. The dealer could not utilise CST paid on inter-state purchases against VAT payable on sales. All these limitations became history on 1st July 2017, when the new indirect tax system “GST” was introduced, which has subsumed many erstwhile indirect taxes. The new tax structure provides the utilisation of GST paid on input towards GST payable on outputs. Gradually the lawmakers unearthed the issue of bogus invoices, which led to fraudulent availment of ITC. Therefore, various amendments have been made to related provisions. The Government has issued many notifications in this regard. The present article highlights the statutory provisions along with practical case studies. The recent notification, which has inserted Rule 86B, has also been thoroughly analysed. The study is purely based on the legal provisions given in CGST Act, 2017 and CGST Rules, 2017, as amended from time to time.