Generally a person is liable for his wrongful acts and one cannot be held liable for the acts done by others. In legal terms this is doctrine of Vicarious Liability and in the layman’s term it is the law of karma. Admittedly no person can be or shall be punished for the act done by others.

But this universal doctrine is of no use as far as arena of GST Law is concerned. Time and again department is bringing in rules to make buyer accountable for timely return filing by the seller. Whether it be Rule 36(4) that restricting ITC of invoices not appearing in Form GSTR-2A to 10% of eligible credit or Rule 86 A blocking of ITC available in electronic credit ledger.

Clock, a pen, a calculator and a business card - COMMERCIAL LEASE

An interesting aspect of both these rules is that they don’t have any enabling section per se, which has now become a standard trend in ushering new rules by the government. Case in point Rule 138 E (Blocking of E-Way Bill)

Rule 36 (4) was introduced through Notification no. 49/2019- Central Tax w.e.f 09/10/2019 and reads as under :-

“(4) Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 20* per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.”

*reduced to 10% wef 01.01.2020

Although only reference to Form GSTR-1 filed under section 37(1) is given, it ipso facto implies to Form GSTR 2A. Thus, Rule 36(4) aims to limit the availment of input tax credit in respect of invoices missing from Form-GSTR 2A due to failure of supplier to upload these in his return i.e. GSTR-1.

Recording of input tax credit in the books of accounts is subject to different scenarios like passing of purchase invoices, receipt of goods on different dates, non-payment of invoices within 180 days etc. Life would have been easier for accountants if the department had simply directed to either not to avail any credit not appearing in GSTR 2A or avail all the credit irrespective of GSTR-2A as Rule 36(4) have burdened them with monthly exercise of matching the total un-availed input tax credit at the time of filing of GSTR-3B to GSTR 2A and also maintaining the trail of such deferred input tax credit.

Amid the difficult time of pandemic, CBIC has provided relaxation in compliance with Rule 36(4) of CGST Rules vide Notification no. 30/2020 dated 03.04.2020 in as much as it has stipulated that said restriction of 10% shall be applied cumulatively for the period February, March, April, May, June, July and August 2020 and the return in Form-3B for tax period September, 2020 shall be furnished with the cumulative adjustment of input tax credit for the said months.

Let’s understand this by of example:-

Eligible Credit as per books of accounts from Feb to Aug, 2020 Rs 1,00,000


Eligible Credit as per books of accounts for Sept, 2020 Rs 20,000
As per GSTR-2A on 11.10.2020 (due date of GSTR-1 of Sept, 2020) Rs 1,40,000
Total ITC that can be availed for period Feb to Sept,2020 Rs 1,40,000+10%

i.e. Rs 1,54,000

ITC that can be availed in Form-3B for the month of September Rs 34,000

(Rs 154000-120000)

The author is chartered accountant offering GST advisory & consultancy and can be reached on email : [email protected]

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  1. Dwarkadas says:

    My opinion: YES. When the gst portal is using the best technology, why it wants to depend on purchaser. It can easily catch the person and collect taxes from the supplier, for which it has authority to do so. But the purchaser is not having any authority. Only he can request. Even then if he does not file he will be the looser of tax amount. Further option available with him will be only not to do business with such supplier. He will be losing the income. In both case the purchaser is at loss due to such provisions


    Why purchaser is liable for the acts not done by seller in the above discussion. Can this rule be challenged in court of law , being it is violating the principles of natural justice.

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March 2021