General disciplines in taking ITC :

Section 16 (11) of the MGL lays down four essential conditions for entitlement of ITC:

(a) The registered taxable person should be in possession of tax paying document issued by a supplier;

(b) The taxable person has received the goods and / or services;

(c) The tax charged on such supply has been actually paid to the government either in cash or through utilization of input tax credit; and

(d) The taxable person should have furnished the return under section 27.

Under the present central indirect tax laws, filing of return by the recipient is not compulsory in order to take ITC. A combined reading of section 27(3) and Proviso to section 28 of the MGL makes it clear that filing of valid return both by the supplier as well as by the recipient is necessary for availment and utilization of ITC.

Where the goods against an invoice are received in lots or instalments, the registered taxable person shall be entitled to the credit upon receipt of the last lot or instalment.

It has also been provided that ITC can be taken on an invoice billed to the taxable person even where goods have been delivered to a person other than taxable person [‘bill to’- ‘ship to’ scenarios]. For this purpose, it would be deemed that the taxable person has received the goods although the goods have been delivered to a third party on his directions.