Section 9B of UTGST Act 2017: Order of utilisation of input tax credit (ITC)

Provisions under Section 9B of the Union Territory Goods and Services Tax (UTGST) Act, 2017 relating to “Order of utilisation of input tax credit (ITC)”, are as under:

Section 9B of UTGST Act 2017: Order of utilisation of input tax credit (CHAPTER IV PAYMENT OF TAX)

Notwithstanding anything contained in this Chapter and subject to the provisions of clause (c) of section 9, the Government may, on the recommendations of the Council, prescribe the order and manner of utilisation of the input tax credit on account of integrated tax, Central tax, State tax or Union territory tax, as the case may be, towards payment of any such tax.

Amendments History:

1. Section 9B inserted vide the UTGST (Amendment) Act, 2018 (GOI Notification dated 30/08/2018), followed with CBIC Notification 1/2019 dated 29/01/2019 on commencement date of 01/02/2019.

Commentary on Section 9B of UTGST Act, 2017

Section 9B of the Union Territory Goods and Services Tax (UTGST) Act, 2017 outlines the “Order of utilisation of input tax credit (ITC)” and establishes the authority of the government to prescribe the order and manner of ITC utilization. This section is important for businesses operating in Union Territories, as it governs how they can use their available input tax credit for paying their tax liabilities. Key points of the commentary on Section 9B of the UTGST Act, 2017 are:

i) Notwithstanding anything contained in this Chapter: This phrase indicates that the provisions of Section 9B will take precedence over any other provision within the same chapter of the UTGST Act, 2017, in case of any inconsistency or conflict.

ii) Subject to the provisions of clause (c) of section 9: Section 9B is subject to clause (c) of Section 9 of the UTGST Act, which refers to the circumstances under which input tax credit can be claimed. This means that the utilization of ITC will be governed by the conditions and restrictions specified in clause (c) of Section 9.

iii) Recommendations of the Council: The Government’s power to prescribe the order and manner of ITC utilization is based on the recommendations of the GST Council. The GST Council is a constitutional body responsible for making recommendations on important aspects of the GST, including rates, exemptions and other related matters.

iv) Input tax credit utilization: The government, based on the recommendations of the GST Council, will prescribe the order and manner in which ITC can be utilized for the payment of integrated tax, Central tax, State tax or Union territory tax. This allows the government to maintain control over the process and ensure the proper administration of the tax system.

In summary, Section 9B of the UTGST Act, 2017 empowers the government to prescribe the order and manner of utilizing input tax credit for the payment of taxes. This provision is subject to the conditions and restrictions specified in clause (c) of Section 9 and based on the recommendations of the GST Council.

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Note: The UTGST Act 2017 has been notified vide GOI Notification dated 12/04/2017, which has subsequently been amended  through UTGST (Amendment) Act 2018, Finance Act 2019, Finance Act 2020, Finance Act 2021, Finance Act, 2022 and Finance Act, 2023 including various Notifications issued by the Govt./ CBIC from time to time, relating to the commencement dates of various Sections/ Provisions in the respective UTGST/ Amendment Acts, wherever required. Information on this page is a Section-wise compilation of the Amendments made by various Notifications issued by CBIC from time to time, with best possible efforts for accuracy. In any case, E&OE. For official/ updated information, please visit CBIC website.