1. A normal belief in the industry today is that the input tax credit (ITC) in respect of invoices pertaining to FY 2017-18 needs to be claimed on or before the due date for filing of the current September month GSTR-3B return (i.e. 20th October). Is that so ? Let us explore.

2. Sec 16(4) of the CGST Act, 2017 provides for the time limit for claiming the ITC. Said provision is reproduced below:

“(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

3. Above provision thus entails that the ITC in respect of invoices which relates to a particular financial year (FY 2017-18 in our case) cannot not be claimed after:

a. due date of furnishing of the return under section 39 for the month of September following the end of relevant financial year or

b. furnishing of the relevant annual return,

whichever is earlier.

4. Now, we need to identify the due date for the furnishing of the return under section 39 for the month of September following the end of relevant financial year and compare the same with the date of furnishing the annual return in order to decide the above referred cut-off point. Earliest of the two dates shall be the cut-off point.

5. Identifying the date of furnishing the annual return is easy as the same shall be the actual date when such annual return is filed.

6. This brings us to the issue of identifying the due date of furnishing of the return under section 39 for the month of September. To answer this question, we must refer to the relevant provisions.

7.  Sec. 39(1) of the CGST Act, 2017 provides as under:

(1) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, in such form and manner as may be prescribed, a return, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars as may be prescribed, on or before the twentieth day of the month succeeding such calendar month or part thereof.”

8. Is GSTR-3B a “return” furnished u/s 39 ?

9. Rule 61 of the CGST Rules, 2017 contains provisions related to submission of monthly returns. Rule 61(1) as notified by Notification No. 10/2017-Central Tax dated 28-Jun-2017 provides as under:

“(1) Every registered person other than a person referred to in section 14 of the Integrated Goods and Services Tax Act, 2017 or an Input Service Distributor or a non-resident taxable person or a person paying tax under section 10 or section 51 or, as the case may be, under section 52 shall furnish a return specified under sub-section (1) of section 39 in FORM GSTR-3 electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.

10. Reading of the above sub-rule leads to an inescapable conclusion that the return specified u/s 39(1) shall be filed in FORM GSTR-3. Now, how did GSTR-3B come into existence ?

11. Vide the referred notification, sub-rule (5) was inserted which provided as under:

(5)Where the time limit for furnishing of details in FORM GSTR-1 under section 37 and in FORM GSTR-2 under section 38 has been extended and the circumstances so warrant, return in FORM GSTR-3B, in lieu of FORM GSTR-3, may be furnished in such manner and subject to such conditions as may be notified by the Commissioner.”

12. Hence the above sub-rule clearly stipulated that GSTR-3B is a return “in lieu of” GSTR-3. Hence had the above sub-rule remained unchanged, one would have treated GSTR-3B as a return stipulated u/s 39(1) and hence the due date of 20thOctober, 2018 for filing such return for the month of September, 2018 shall be the cut-off point, since the same shall happen before the date of furnishing the annual return, for claiming ITC in respect of invoices relating to FY 2017-18.

13. But the Government, in their wisdom, substituted sub-rule (5) referred above vide Notification No. 17/2017-Central Tax dated 27-Jul-2017 by following two sub-rules:

(5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 and in FORM GSTR-2 under section 38 has been extended and the circumstances so warrant, the Commissioner may, by notification, specify that return shall be furnished in FORM GSTR-3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner.

 (6) Where a return in FORM GSTR-3B has been furnished, after the due date for furnishing of details in FORM GSTR-2 —

 i. Part Aof the return in FORM GSTR-3 shall be electronically generated on the basis of information furnished through FORM GSTR-1, FORM GSTR-2 and based on other liabilities of preceding tax periods and PART B of the said return shall be electronically generated on the basis of the return in FORM GSTR-3B furnished in respect of the tax period;

 ii. the registered person shall modify Part Bof the return in FORM GSTR-3 based on the discrepancies, if any, between the return in FORM GSTR-3B and the return in FORM GSTR-3 and discharge his tax and other liabilities, if any;

 iii.  where the amount of input tax credit in FORM GSTR-3 exceeds the amount of input tax credit in terms of FORM GSTR-3B, the additional amount shall be credited to the electronic credit ledger of the registered person.”

14. Above substitution which is made retrospectively applicable from the implementation date (i.e. 01.07.2017) implies that GSTR-3B is not a return which is “in lieu of” GSTR-3. It is only a stop-gap arrangement to ensure monthly payment of tax. It seems that the above substitution was made in a hope to make the registered tax payers file GSTR-3 at some future date (which now seems almost uncertain).

15. However in view of the above substitution, GSTR-3B legally is not a return which is in lieu of GSTR-3 prescribed u/s 39 read with Rule 61(1). Hence GSTR-3B cannot be considered as a return u/s 39(1) since only GSTR-3 referred under Rule 61(1) can be considered as a return. Now, the time limit for furnishing GSTR-3 has not been notified. This can be confirmed by referring to the Notification No. 32/2018 – Central Tax dated 10th August, 2018 wherein due date for filing GSTR-1 for the months from July, 2018 to March, 2019 was notified. Relevant paragraph of the said Notification is reproduced below:

“The time limit for furnishing the details or return, as the case may be, under sub-section (2) of section 38 and sub-section (1) of section 39 of the said Act, for the months of July, 2018 to March, 2019 shall be subsequently notified in the Official Gazette.”

16. Hence as on date, the due date for filing of return u/s 39(1) is not yet notified. It may also be noted that despite Sec. 39(1) stipulating the time limit (of 20thof the succeeding month) for filing of the return, Government has assumed power u/s 168 to notify a different date or to notify a date in future. We accept the validity for assuming such power as without the same, due date for any return could not be extended.

17. In view of the above fact that only GSTR-3 can be considered as a return u/s 39 read with Rule 61(1) and also considering the fact that due date for the same is yet to be notified (it never will it seems), there cannot be any due date to compare as provided u/s 16(4) supra.

18. In view of the above background, unless Rule 61(5) is not amended to make GSTR-3B a return “in lieu of” GSTR-3, the due date referred u/s 16(4) for the month of September cannot be ascertained.

19. In absence of ascertainment of the due date for the month of September, the only other date available is the date of filing of the annual return. Hence the cut-off point for availing ITC in respect of invoices pertaining to FY 2017-18 shall be the date of furnishing the annual return.

20. Above conclusion is also logical since it is only at the time of filing the annual return that a registered tax payer can ascertain the ITC which he might have missed pertaining to FY 2017-18. Hence advancing the due date for claiming ITC as compared to filing of the annual return is clearly an anomaly and needs to be addressed.

21. It is suggested to the Government to clarify their stand on the above conclusion urgently (especially whether they will amend Rule 61(5) retrospectively) so as to avoid any confusion.

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3 Comments

  1. Tarique Rizvi says:

    Ofcourse should be extended becasue tax audit is still going on and the correct data will be available only and only after the tax audit report gets successfully filed. The department should consider the situation.We dont want to file any thing provisional. Should be well authenticated and duly audited by chartered accountants. Hence date for taking effect of input & output both should be extended and sufficient time limit further should be given to the all the GST Holders.

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