Question

XYZ having manufacturing unit at Gujarat and godown in Maharashtra. When the goods are stock transferred from Gujarat to Maharashtra, GST is paid on it being distinct person concept under GST provisions and Maharashtra is taking credit of the GST charged by Gujarat. However, since both are same entity, there is no payment made by Maharashtra to Gujarat. Can the GST authorities deny the credit to Maharashtra since one of the conditions is payment to be made to the supplier within 6 months?

Answer

Section 16 of CGST Act states the eligibility and conditions for taking ITC. One such condition of eligibility to take ITC as stated in second proviso is that payment is to be made within 180 days of issue of invoice. The same is reproduced below:
Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed.
However proviso to Rule 37 of CGST Rules states that the value of supplies made without consideration as specified in Schedule I of the said Act shall be deemed to have been paid for the purposes of the second proviso to sub-section (2) of section 16.
In your case Unit in Gujarat and godown in Maharashtra are distinct units, therefore as per proviso to aforesaid rule consideration is deemed to have been paid and thus GST authorities cannot deny the credit to Maharashtra unit on the condition that payment is not made to supplier. (Reply dt.01/05/2019)