In re Vishnu Chemicals Limited (GST AAAR Andhra Pradesh)
The tax invoice dated 01.04.2020 issued by the supplier of service for the rental service supplied for the period 01.04.2018 to 31.03.2019 is hit by the limitation for claiming ITC under Section 16(4) of the CGST/SGST Act, 2017. The appellant is not eligible to claim Input Tax Credit on the disputed invoice.
The main subject of contention is the issuance of a tax invoice dated 1.04.2020 for monthly rental services extended from April 2018 to March 2019 and its eligibility thereon to claim input tax credit under Sec.16(4).
The AAR while passing the Ruling, recorded the findings pertaining to the statute with reference to ‘the issuance of invoice as per Section 31 read with Rule 47’ and then found that the invoice dated 01.04.2020, in question, does not pertain to the financial year 2020-21 as the services supplied vide the invoice question pertains to the financial year 2018-19 in which the services were rendered.
In this case The supplier of service issued a tax Invoice dated 01.04.2020 covering the period from 01.04.2018 to 31.03.2019. Therefore the supply of service pertains to the financial year 2018-19. The date on which the invoice issued was 01.04.2020 and hence appears that the invoice issued pertains to the financial year 2020-21. However, the date of invoice or the period to which an invoice pertains will be determined only by the period of supply covering which the said invoice was issued. Therefore, in the instant case, irrespective of the date of Invoice (which is leading to mis-interpretation of the period of Invoice), the same is pertaining to the period of supply covered by the said invoice i.e. 2018-19.
In the instant case, as the invoice pertains to the financial year 2018-19, vide Section 16 (4), the ‘recipient is entitled to take ITC on an the same before furnishing of Return under section 39 for the month of September, 2019 following the end of financial year 2018-19 to which such invoice pertains or furnishing of the relevant annual return for the year 2018-19, whichever is earlier.
Even the proviso to section 16 (4) reiterates that the registered person is entitled to take ITC in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18. This proviso absolutely necessitates or rather endorses the invoices relating to supplies made during the financial year 2017-18 only, for the registered dealer to claim entitlement of ITC in the succeeding financial year.
In light of the above, we uphold the decision of the lower Authority, while dismissing the plea of the appellant for the reasons explained supra. It is our considered view that the appellant is not eligible to claim Input Tax Credit on the disputed invoice dated 01.04.2020 that was issued covering the supply of services pertaining to the period from 01.04.2018 to 31.03.2019.
FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH
(Under Section 101 of the Central Goods and Service Tax Act and the Andhra Pradesh Goods and Service Tax Act).
At the outset, we would like to make it clear that the provisions of both the CGST Act and the APGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the APGST Act.
The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Andhra Pradesh Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and APGST Act”] by M/s. Vishnu Chemicals Ltd (herein after referred to as the “Appellant”) against the Advance Ruling No. AAR No.21/AP/GST/2021 dated 20.07.2021 issued by Authority for Advance Ruling, Andhra Pradesh.
1. Background of the Case:
1.1 The appellant , M/s. Vishnu Chemicals Limited is engaged in manufacture of Basic Chromium Sulphate, Sodium Sulphate and Chromic Acid falling under HSN 28332990, 28331100 and 28191000. For the purpose of storing the raw material as well as finished goods, the applicant needed some additional storage space and therefore, entered into lease agreements with M/s. Usha Tubes and Pipes Pvt. Ltd., Visakhapatnam (GSTIN:37AAACU7175R1ZG) (referredto as “UTPL”) for leasing of go downs situated at UTPL Campus, Mindi, Gajuwaka, Visakhapatnam.
1.2 The appellant submitted that monthly rental bills were received from M/s UTPL regularly till March 2018. But for the months from April 2018 to March 2019, M/s UTPL issued a single tax invoice bearing No. UTPL0919117KVC dated 01.04.2020 mentioning in the description as Rental charges for the months from April 2018 to March 2019 by showing rent month-wise for 12 months. The invoice mentioned CGST as 26,64,090/- and SGST of Rs. 26,64,090/- on total taxable value of Rs. 2,96,01,000.
1.3 The appellant had approached the Authority for Advance Ruling seeking a clarification whether the invoice dated 01.04.2020 is eligible for input tax credit if claimed before filing GST return for September 2021 or Annual return for 20-21 in terms of Sec 16(4). The Authority for Advance Ruling Andhra Pradesh in its orders in AAR no.21 /AP/GST/2021 Dt.20.07.2021 ruled as under:
Question 1: Whether the tax invoice dated 01.04.2020 issued by the supplier of service for the rental service supplied for the period 01.04.2018 to 31.03.2019 is hit by the limitation for claiming ITC under Section 16(4) of the CGST/SGST Act, 2017.
Answer: The invoice referred pertains to the services rendered in the financial year 2018-2019 and hence it is ‘hit by the limitation for claiming ITC’ under Section 16(4).
Question2 : If the applicant avails ITC on such invoice after 01.04.2020 and before filing GST return for September 2021/Annual Return for 2020-2021, whether it amounts to violation of condition stipulated under sub-section(4).
Answer : Affirmative.
Aggrieved by the above ruling, the appellant has filed the present appeal on the following grounds.
2. Grounds of Appeal:
The appellant states that the ruling of AAR is not legal and proper and it is based on the erroneous interpretation of the provisions of Sec 16(4) of the CGST/APGST Act, 2017. The detailed grounds are as follows:
2.1 The AAR had held in its ruling as under:
“The provisions of section 31(2) read with Rule 47, prescribe a time limit for issue of invoice. As per Rule 47, tax invoice in case of supply of service shall be issued within a period of 30 days from the date of services. Since in this case, invoice was not issued within the prescribed time limit, the appellant is not eligible for credit.”
In this regard, the appellant submits that there is no condition under Sec 16 that only invoices issued within the due date a per sec 31(2) read with Rule 47 of the CGST/APGST Rules, 2017 are eligible for credit. Going by the Ruling if any supplier issues invoice on 31′ day of the supply of service, such invoice is not eligible for credit. This is not mandated in sec 16 as erroneously held by the Ld. AAR. If there is any delay in issuance of invoice by the supplier, action for such violation lies with the supplier’s jurisdiction by way of collecting interest for delayed payment of tax or imposing penalty for violation of the provisions of Sec 31(2) read with Rule 47. Delayed issuance of invoice cannot be a ground to deny the credit to the buyer.
2.2 Another ground taken by the Ld. AAR is that the invoice dated 01.04.2020 issued by the supplier “does not pertain to the Financial year 2020-21”, but pertains to Financial year 2018-19 and hence not eligible for credit.
In this regard, the appellant submit that restriction under sec 16(4) is not for the “supplies made during a Financial Year”, but only documents issued during the Financial year.
For example, if supplies are made in FY 2018-19 and due to price escalation, if a debit note is issued in the month of October 2019, for supplies made in FY 18-19, then limitation under Sec 16(4) in respect of such debit note for claiming ITC would be Sept 2020, but not Sept 2019 (based on original supply date).
2.3 The appellant further submits that CBIC has issued a clarification on 20.09.2021 on interpretation of the provisions of Sec 16(4) vide Circular No.160/16/2021-GST, with the following illustration:
“Illustration 2. A debit note has been issued on 10.11.2020 in respect of an invoice dated 15.07.2019. As per amended provision of section 16(4), the relevant financial year for availment of input tax credit on the said debit note, on or after 01.01.2021, will be FY 2020-21 and accordingly, the registered person can avail ITC on the same till due date of furnishing of FORM GSTR-38 for the month of September, 2021 or furnishing of the annual return for FY 2020-21, whichever is earlier.”
From the above illustration, the following emerges:
