Question ID :
Input Tax Credit Reversal
Supplier is engaged in providing works contact service to government which attract 12% GST rate. Works contact service provider uses machinery in execution of contract for which Machine supplier is paid on hourly basis. however diesel is purchased and given to Machine supplier by the works contractors and the same is recovered from bills payable to machine supplier.
Query No.01. Is common input tax credits needs to be reversed in books of works contract service provider as there is exempt supply or can it be interpreted that on purchase of diesel no input tax is availed hence no requirement of reversal.
Query No.02. Is bill of supply needs to be raised for such exempt supply, however contractor is not engaged business of diesel supplier.
Dec 28 2018 12:00AM