GST credit on vendor developed tools

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This discussion clarifies whether a business in the automobile sector can claim GST credit on a tool developed by their vendor, even though the tool remains at the vendor's location. The consensus is that GST benefit can be claimed, provided a challan is prepared for sending the tool for use in manufacturing job work. While possession of goods is typically required for ITC, the vendor holding the tool on your behalf is considered acceptable in this scenario. The need for an e-way bill is also addressed, noting it's not required for goods valued under £50,000, and departmental checks are primarily during transport.

prachee

prachee (Querist)

04 March 2020 Dear Expert,

We are into automobile sector , our vendor "X" has developed one tool and it is at his location , also the spares/ parts developed from it , will be supplied to us.

Vendor has raised GST invoice for the same where "ship to" and "bill to" is in our name.

Can we take GST benefit on the same ?

As per Rule 16 (2)(b) , possession of good is must for us.

Please clear my query.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

04 March 2020 Yes you can take the GST benefit on the same. Prepare a challan for sending it for use in manufacturing job work.

prachee

prachee (Querist)

09 March 2020 Sir, if department want to check through E way bill , how we can co-relate the things because there will be no e waybill issued for the same.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

09 March 2020 E way bill not required if value is less than 50,000.

prachee

prachee (Querist)

10 March 2020 Dear Sir, the value of machine is more than 2 lakh .

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

10 March 2020 Dept will not check E way bill after transport. During transport only it will be checked.
Claim ITC you will not face any problem as your vendor is holding it on behalf of you.

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