No Denial of GST ITC on Interest-Free Advance Receipts: Bombay HC in L&T, IHI Consortium Case

The Bombay High Court ruled that GST Input Tax Credit (ITC) cannot be denied on interest-free advance receipts. The case involved L&T-IHI Consortium, which received interest-free advances for a project. The tax authorities denied ITC on these advances, arguing that they did not constitute consideration for supply. The court held that the advances were part of the contractual arrangement and should be treated as consideration for the supply of goods and services. The ruling emphasized that the definition of “consideration” under the GST Act includes any payment made or to be made for the supply of goods or services. The court clarified that the nature of the payment, whether interest-free or not, does not affect its status as consideration. This decision provides clarity on the treatment of advance payments under GST and ensures that businesses can claim ITC on such payments, promoting fair tax practices and compliance.