Settlement of mutual debts through book adjustment is a valid mode of payment under the GST Act
The AAR of West Bengal rules in favour of footwear manufacturer, observes that, in case of sale and buyback transactions, ITC cannot be denied in respect of goods purchased from outsourced vendors, where payment is settled through book adjustment against the debt created on outward supplies to these vendors.
AAR holds that “settlement of mutual debts through book adjustment is a valid mode of payment under the GST Act.The Recipient will be able to pay the supplier by way of setting book debt since the provision of the Act has not put any restriction in this regard”.
The AAR refers to the decision of WB AAR in Senco Gold Ltd, which relied on the inclusive scope of the word ‘consideration’ defined u/s 2(31) to widen the scope and range for mode of payment and thus derives that, “when there is barter of goods or services, the same activity constitutes supply as well as a consideration”.
The copy of the order is as under:
paragon-polymer-products-pvt-ltd-518961 (1)
From,
Krishnakant Jakhotia
Mobile No :-9422507911
Email Id :- taxtalknew@gmail.com
