Is there is any way to take Input tax Credit beyond the due date of return for the month of September? If no, what are other ways to get it?
Let take two scenario to understand legal approach to take Tax benefit:
1. Taxpayer not claimed Input Tax credit of Supplier Invoices for FY18-19, till the due date of return for the month of September, 19. Now question arise is there is any alternative way for him?
2. Taxpayer receives supplies for FY18-19 liable to RCM under GST law, so he paid liability through cash as required in respective Tax Period but forgot to take Credit and due date of return for the month of September,19 expired. Now the question arise is there is any alternative way for him?
“Provision of GST LAW”
Input Tax Credit (ITC) is the core concept of GST as GST is destination-based tax. ITC avoids cascading effect of taxes and ensures that tax is collected in the State in which goods or services or both are consumed.
Input Tax Section 2(62) of CGST Act defines ‘input tax’ as follows— “Input tax” in relation to a registered person, means the Central tax (CGST), State tax (SGST), Integrated tax (IGST) or Union territory tax (UTGST) charged on any supply of goods or services or both made to him and includes—
(a) The integrated goods and services tax charged on import of goods
(b) The tax payable under the provisions of sub-sections (3) and (4) of section 9 [reverse charge of CGST]
(c) The tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act [reverse charge of IGST]
(d) The tax payable under the provisions of sub-section (3) and sub-section (4) of section 9 of the respective State Goods and Services Tax Act [reverse charge of SGST] or
(e) The tax payable under the provisions of sub-section (3) and sub-section (4) of section 7 of the Union Territory Goods and Services Tax Act [reverse charge of UTGST], but does not include the tax paid under the composition levy.
Input Tax Credit is eligible only when it is credited to electronic credit ledger of taxable person.
Eligibility and condition for Taking Input Tax Credit:-
Every registered taxable person shall, subject to such conditions and restrictions as may be prescribed^ (Rule36 of CGST RULES, 2017) and in the manner specified in section 49 of CGST Act, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person – section 16(1) of CGST Act.
Registered Taxpayer must satisfied the below condition before taking ITC:-
1. He is in possession of Tax Invoice or Debit note issued by registered supplier and other document as prescribed under Rule 36 of CGST Rules,2017.
2. He has received Goods or Services or Both.
3. Tax paid to Government.
4. He has furnished the return under Section 39.
Further Provided that, a registered person shall not be entitled to take input tax credit in respect to any invoices 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 debit note pertains or furnishing of the relevant annual return, Whichever is earlier.
Documentary requirement and conditions for claiming input tax credit: RULE 36 OF CGST RULE,2017-
The input tax credit shall be availed by a registered person, including the Input Services Distributor (Commonly known as ISD), on the basis of following document, namely,-
1. An invoice issued by the supplier of Goods or Services or Both in accordance with provision of Section 31.
2. An invoice issued in accordance with the Provision of Clause (f) of Sub- Section (3) of Section 31, Subject to payment of tax.
3. …..
4.
Tax Invoice:- Section 31
(1)A registered person supplying taxable goods shall, before or at the time of :-
a) Removal of goods for supply to recipient, where the supply involves the movement of goods; or
b) Delivery of goods or making available thereof to the recipient, in any other case, issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particular as may be prescribed in Rule 46.
(2) A registered person supplying taxable services shall, before or after the provision of services but within time prescribed under rule 47 of CGST Rule,2017 issue tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particular as may be prescribed in Rule 46/46 A of CGST Rule,2017.
(3) Notwithstanding anything contained in Sub-section (1) and (2)-
a.) to e.)………
f) A registered person who is liable to pay tax under Sub- Section (3) or Sub- Section (4) of Section 9 shall issue an invoice in respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or services or both.
Section 9 – Levy and Collection
(1) There shall be levied a tax called the central goods and services tax on all intra-state supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on taxable values and at such rate as may be prescribed.
(2) ……..
(3) The Government may, on the recommendation of the council, by notification, specify categories of Goods or Services or both, tax on which shall be paid on Reverse Charge Basis by the recipients.
(4) The Government may, on the recommendation of the council, by notification, specify categories of registered person who shall, in respect of Supply of Specified categories goods 0r services or both received from Unregistered Supplier, pay the taxes on Reverse Charge basis.
Refund Procedure in GST – Section 54:-
Sub Section(1), Any Person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him , may make an application before the expiry of 2 years from the relevant date in such form and manner as prescribed in Rule 89.
Sub Section (3), A registered person may claim refund of unutilized input tax credit at the end of any tax period.
Provided that no Refund of Unutilized input tax credit shall be allowed in case other than-
a) Zero-rated supplies made without payment of tax;
b) Where the credit has accumulated on account of rate of tax on Input being higher than the rate of tax on output supplies(Other than nil rated or fully Exempt).
Sub Section (4), Application for refund must be accompanied with Proper Documentary Evidences as prescribed in Rule 89 of CGST Rules,2017.
Sub Section (5) & (8), If, on receipt of application, proper officer is satisfied that whole or part of amount claimed as refund is refundable, he make an order accordingly to release payment. The refunded amount shall be credited directly to taxpayer bank account, “ The tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person”.
Definition of Refund:
“Refund includes refund of tax paid on Zero-rated supplies of goods or services or both or on input or input services used in making such supplies or refund of tax on supply of goods regarded as deemed export or refund of unutilized input tax credit as provided under Sub-Section 3”.
Rule 89 of CGST RULES,2017:-
Any person claiming refund of any tax, interest, penalty, fees or any other amount paid by him, other than refund of integrated tax paid on goods exported out of India, may file an application electronically in Form GST RFD-01 through the common portal.
“Conclusion to Queries”
1.“Taxpayer not claimed Input Tax credit of Supplier Invoices for FY18-19, till the due date of return for the month of September, 19. Now question arise is there is any alternative way for him?”
Conclusion: –
1. As prescribed under Sec 41 of CGST Act, 2017, every registered person shall, subject to such condition and restriction as may be prescribed, be entitled to take credit of eligible input tax, as self-assessed, in his return and such amount shall be credited on a provisional basis to his electronic credit ledger.
2. Under Sec 39 of CGST Act, 2017, Furnishing a return, electronically, of inward and outward supplies of goods or services or both.
3. Under Sec 16 of CGST Act, 2017 , a registered person shall not be entitled to take input tax credit in respect to any invoices 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 debit note pertains or furnishing of the relevant annual return, Whichever is earlier.
It is clear from above provision; there will be no other way to get Input Tax Credit beyond the Time Period mention under Sec 16 of CGST Act, 2017. If the taxpayer ,due to any of the reason, unable to take Input Tax Credit within time frame as specified under GST Law, then ITC will get lapsed and it will consider to be part of Cost of Business.
However As per Sec 172 of CGST Act, Government ,after recommendation from the council, is empower to recommended order for the removal of difficulties in compliance to provision of GST procedure.
By Order No. 02/2018 – Central Tax dated 31st December, 2018: The registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 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, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of the said section for the month of March, 2019.
2.“Taxpayer receives supplies for FY18-19 liable to RCM under GST law, so he paid liability through cash as required in respective Tax Period but forgot to take Credit and due date of return for the month of September,19 expired. Now the question arise is there is any alternative way for him”?
Conclusion:-
1. Reverse charge is a mechanism under which the recipient of the goods or services is liable to pay the tax instead of the provider of the goods and services. Under the normal taxation regime, the supplier collects the tax from the buyer and deposits the same after adjusting the output tax liability with the input tax credit available. But under reverse charge mechanism (RCM), liability to pay tax shifts from supplier to recipient. Sec 9 (3) &(4) empower the Government to specify the Goods or Services or Categories of registered taxpayer who is liable to pay taxes under Reverse Charge.
2. As per section 49(4) of CGST Act’2017, ITC can be used for payment of output tax only. Therefore tax under reverse charge can be paid through cash only without availing the benefit of ITC. The supplier must mention in his tax invoice whether the tax is payable on reverse charge. The service recipient can avail Input Tax credit on the Tax amount that is paid under reverse charge on goods and services. The only condition is that the goods and services are used or will be used for business or furtherance of business.
3. It is clear from above provision, that where there is liability to pay taxes under RCM, Taxpayer is required to pay taxes through GST using cash ledger and take ITC in same month.
If Services (RCM applicable) is taken from Unregistered person, then recipient is required to issue self-invoices as Sec 31 (3)(f) indicating the details as prescribed in Rule 46.
However, if the Recipient pay the RCM liability but forgot to take ITC within stipulated time as specified in Sec 16 and Removal of difficulty order. Then he will not be able to take ITC afterwards.
But there is special provision of Refund As per sec 54, which specified any Person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him , may make an application before the expiry of 2 years from the relevant date in such form and manner as prescribed in Rule 89. So this provision can be used to get Refund of Tax paid on RCM even though ITC not undertaken within stipulated time. Sec 54 specially provide that taxes has to be paid by Taxpayer claiming refund, Under RCM transaction taxapyer pay taxes as recipient of Supplies, so this can be used for refund of RCM taxes ITC unclaimed. Rule 89 of CGST rules requires taxpayer to file application in RFD-01 electronically along with Documentary Evidences showing the details of the amount of claim on account of excess payment of tax. Also certification in Annexure B of GST RFD-01 by Chartered Accountant if Claim amount is more than two lakhs rupees giving declaration to the effect that the incidence of tax claimed as refund has not been passed on to any other person.
Definition of Refunds is Inclusive definition, so there will be open gateway for
In Nut-Shell :- So it is properly clear that Taxpayer cannot take ITC of supplies received under Forward charges if its time barred, but for RCM taxes which taxpayer forgot to take ITC within stipulated time period can be claim as Refund Under section 54 within 2 years from the date of payment of taxes (i.e GSTR-3B Due Date).
Author Bio
a showcase cum demand notice is issued under sec.16 of CGST ACT 2017 non eligibility on ITC as return file late during 2018/2019. any suggestion as its a big amount.