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Petrol and diesel are mainly used in vehicles. Therefore, that is the area to be looked into very carefully. Here are some points

1. GST Authority should categorise vehicles into commercial and non- commercial

Bringing petrol and diesel into GST NET

2. Authority should allow input tax credit on purchase of fuel (petrol and diesel) only to commercial vehicles that is used for business purposes by a regular GST dealer

3. The authority should not allow input tax credit on purchase of fuel to non-commercial vehicles  even if it is used for business purposes by a regular GST dealer

4. A GST dealer is required to link his commercial vehicle’s registration number with his GSTIN in order to claim input tax credit. For this, he should submit an application to GST authority together with his vehicle’s registration certificate and a photo of the vehicle.

5. The authority, after receiving the application, should check -

  • In the case of sole proprietorship, whether the registered owner of the commercial vehicle as shown in the vehicle’s registration certificate is the same person to whom the regular GSTIN has issued
  • In the case of partnership firm/ company, whether the registered owner of the commercial vehicle as shown in the vehicle’s registration certificate is the authorised signatory of the firm/company  to which the regular GSTIN has issued

6. The authority should also get a declaration from the applicant as “the commercial vehicle which is being linked with my/our GSTIN will be used only for business purposes and in case it is used for any other purpose, the ITC will not be availed with respect to fuel used for such purposes and in case it is sold or scrapped, the vehicle number will be unlinked from my GSTIN within the prescribed time”.

7. The authority, after being satisfied with the details, should pass an order acknowledging linking of the vehicle with the GSTIN for claiming input tax credit. He may also require the dealer to show his GSTIN on the vehicle for convenience.

8. Once the vehicle number has been linked with a GSTIN, the dealer can go to any fuel dealer to purchase fuel and get a B2B GST invoice having his GSTIN and Vehicle Number endorsed in the invoice as a proof for claiming ITC.

9. The authority should make sure that ITC cannot be claimed by a dealer if the invoice for inward supply does not contain the linked vehicle’s registration number

10. The authority should make sure that a fuel dealer can issue a B2B GST invoice endorsing the vehicle number only to a commercial vehicle he has filled fuel with.

11. The fuel dealer should issue B2C GST invoices in his all other outward supplies

12. I believe all other supply chains of petroleum products will function in the normal way without much difficulties.

The author can also be reached at acscalicut@gmail.com

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