For the purpose of availing ITC, time limit has been prescribed in the Goods and Service Tax Act, 2017 (CGST Act, 2017). According to Section 16(4) of the CGST Act, 2017, a registered person is eligible to take input tax credit with respect to the invoice or debit note for inward supply of goods and/ or services, earlier of the due date for filing of Form GSTR 3B for the month of September for subsequent year or filing of annual return for the period to which such invoice or debit note pertains to.

Section 16(4) of the CGST Act, 2017 may be read as under-

“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.”

As per Section 16(4) of the CGST Act, 2017 the last date to avail ITC for the invoices of a particular financial year would be the due date of filing of return under Section 39 of the CGST Act, 2017 for the month of September following the end of the relevant financial year or Annual Return u/s 44 of the CGST Act, 2017 for the relevant financial year, whichever is earlier.

It is also submitted that there are two important provisions which should be considered regarding maximum time limit to avail ITC, first provision is Section 39 of the CGST Act, 2017 and second one is Section 44 of the CGST, Act, 2017.

The relevant provisions of both Sections and rules related thereto read as under-

Section 39. Furnishing of returns.

“(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, 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, in such form and manner, and within such time, as may be prescribed.”

Rule 61. Form and manner of submission of monthly return.

“(1) Every registered person other than a person referred to in Section 44 of the Integrated Goods and Service 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.”

Section 44. Annual return.

(1) Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a causal taxable person and a non-resident taxable person, shall furnish an annual return for every financial year electronically in such form and manner as may be prescribed on or before the thirty first day of December following the end of such financial year.”

Rule 80. Annual return.

“(1) Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a causal taxable person and a non-resident taxable person, shall furnish an annual return as specified under sub-section (1) of section 44 electronically in FORM GSTR-9 through the common portal either directly or through a Facilitation Centre notified by the Commissioner.”

By reading the above relevant sections and rules relating thereto, the maximum time period to file ‘Annual Return’ is specified under Section 44 of the CGST Act, 2017 which is 31st Day of December from the end of the financial year and requisite form to file Annual Return is specified by Rule 80 of the CGST Rules, 2017 which is FORM GSTR 9. Further, in case of return under Section 39 of the CGST Act, 2017, FORM GSTR 3 is specified in Rule 61 of the CGST Act, 2017 but no time period is specified to file this form i.e. FORM GSTR 3 whether in Section 39 or Rule 61.

It is stated that the CGST Act, 2017 prescribed three returns i.e. GSTR-1 (for outward supply), GSTR-2 (for inward supply) and GSTR-3 (Combined Return for outward and inward supply). However, due to technical glitches in the system, return in GSTR-2 and GSTR-3 were kept in abeyance. Therefore, a shorter return in the form GSTR-3B was introduced as a stop gap arrangement till due date for filing of the return in GSTR-3 is notified.

It is submitted when the CGST Rules, 2017 were notified, first time, it became as Central Goods and Services Tax Rules, 2017, however, it was contained only some rules. Later on, in exercise of the powers conferred by section 164 of the Central Goods and Services tax Act, 2017 (12 of 2017), the Central Government, vide Notification No. 10/2017-Central Tax, dated 28.06.2017, amended the CGST Rules, 2017 as Central Goods and Services Tax (Second Amendment) Rules, 2017, by which more rules after rule 26 were inserted. By the aforesaid amendment, Rule 61 has been introduced. Rule 61(5) provides that

“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.”

Further, in exercise of the powers conferred by section 164 of the Central Goods and Services tax Act, 2017 (12 of 2017), the Central Government, vide Notification No. 17/2017-Central Tax, dated 27.07.2017, amended the CGST Rules, 2017 as Central Goods and Services Tax (Fourth Amendment) Rules, 2017, by which Rule 61(5) was amended retrospectively (w.r.e.f 01.07.2017) to replace ‘Return in Form GSTR-3B being in lieu of Form GSTR3’with ‘Form GSTR-3B being in lieu of Form GSTR-3 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, 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.

Thereafter, notifications were issued from time to time extending the due date of filing in GSTR-3 i.e. return required to be filed under Section 39 of the CGST Act, 2017. The latest Notification No. 44/2018– Central Tax dated 10 September 2018 states that the due date of filing the return under Section 39 of the CGST Act, 2017 for the months of July 2017 to March 2019 shall be subsequently notified in the Official Gazette.

Later through a Press Release dated 18 October, 2018, it was clarified that last date for claiming of ITC for invoices issued during the period July 2017 to March 2018 shall be the last date of filing of GSTR-3B for the month of September 2018 i.e. 20th October 2018.  Para 3 of the press release dated 18.10.2018 says that

“With taxpayers self-assessing and availing ITC through return in FORM GSTR-3B, the last date for availing ITC in relation to the said invoices issued by the corresponding supplier(s) during the period from July, 2017 to March, 2018 is the last date for the filing of such return for the month of September, 2018 i.e. October 20, 2018.”

 This created a huge confusion that whether the GSTR-3B is a return prescribed under Section 39 of CGST Act 2017 i.e. GSTR-3 or GSTR-3B is the substitute of GSTR-3. Against the said Press Release, AAP and Company, Chartered Accountants had filed a writ petition challenging the legality and validity of the same.

 On 24 June 2019 the Hon’ble Gujarat High Court has given a landmark ruling in the case of AAP & Company, Chartered Accountants v/s Union of India that the FORM GSTR-3B is not a ‘Return’, rather Return specified for Section 39 in Form GSTR-3 is a ‘Return’. The Court observed and held that the return in Form GSTR-3B is only a temporary stop gap arrangement till due date of filing the return in Form GSTR-3 is notified. The Court also observed the following-

“31. It would also be apposite to point out that the Notification No.10/2017 Central Tax dated 28th June 2017 which introduced mandatory filing of the return in Form GSTR-3B stated that it is a return in lieu of Form GSTR-3. However, the Government, on realising its mistake that the return in Form GSTR-3B is not intended to be in lieu of Form GSTR-3, rectified its mistake retrospectively vide Notification No. 17/2017-Central Tax, dated 27.07.2017 and omitted the reference to return in Form GSTR-3B being return in lieu of Form GSTR-3.

32. Thus, in view of the above, the impugned press release dated 18th October 2018 could be said to be illegal to the extent that its para-3 purports to clarify that the last date for availing input tax credit relating to the invoices issued during the period from July 2017 to March 2018 is the last date for the filing of return in Form GSTR-3B.

33. The said clarification could be said to be contrary to Section 16(4) of the CGST Act/GGST Act read with Section 39(1) of the CGST Act/GGST Act read with Rule 61 of the CGST Rules/GGST Rules.”

Further, Notification No. 49/2019 Central Tax dated 09/10/2019 has been issued after the decision of Hon’ble Gujarat High Court, giving retrospective amendment to Rule 61(5) categorised Form GSTR 3B as a return u/s 39 of CGST Act. It amended Rule 61(5) of the CGST Rules, 2017 provides that-

 “where the time limit for furnishing of details in Form GSTR-1 under section 37 or in Form GSTR-2 under section 38 has been extended, the return specified in sub-section (1) of Section 39 shall, in such manner and subject to such conditions as the Commissioner, may, by notification, specify, be furnished in in Form GSTR-3B, electronically through common porta, either directly or through a Facilitation Centre notified by the Commissioner.”

 Provided that where a return in Form GSTR-3B is required to be furnished by a person referred to in sub-rue (1) then such person shall not be required to furnish the return in Form GSTR-3.”

 Remark:  The department has filed an appeal against the above referred decision in Supreme Court vide Union of India & Others Vs AAP And Co, in (2019-TIOL-543-SC-GST) which is pending as on date and Supreme Court has stayed order of Hon’ble Gujarat High Court, which held that GSTR 3B is not a return.

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Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.

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One Comment

  1. unnikrishnan vasudevan says:

    What will be the timelimit in cases of changes made by debit / credit notes after 31/3/. Rule provides for availing credit of ITC on credit notes,the date of issue of such credit note will be reckoned with. Here only next FY ,the credit note adjustments get adjusted and if so how ITC get regularised?
    Annual return can make changes in respect of credit notes issued within the FY.,the credit of ITC also get rrgularised .
    In the above,there appears ambiguity in the provisions regulating ITC .pl clarify..
    Unnikrishnan v Cochin.

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