Finance Bill, 2021 inserted new Section 16(2)(aa)
What is the impact of Section 16(2)(aa) on ITC in the near future which is introduced by Finance bill 2021.
In this Article we are trying to discuss & analysis sec 16(2)(aa) with sec 37.
Provision as per Law
16(2) (aa)
The details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37;
Analysis portion
Finance Bill 2021 inserted new section 16(2)(aa)
According to this section Registered Person can take ITC only when detail furnished by the supplier in the statement of outward supplies AND details have been communicated to Registered Person in the manner specified U/S 37
According to sec 37
Every registered person, other than an Input Service Distributor, a non-resident taxable person and a person paying tax under the provisions of section 10 or section 51 or section 52, shall furnish, electronically, in such form and manner as may be prescribed, the details of outward supplies of goods or services or both effected during a tax period on or before the tenth day of the month succeeding the said tax period and such details shall be communicated to the recipient of the said supplies within such time and in such manner as may be prescribed:(Rule 59)
As per amended Rule 59 by notification no. 82/2020
The details of outward supplies furnished by the supplier shall be made available electronically to the concerned registered persons (recipients) in Part A of FORM GSTR-2A, in FORM GSTR-4A and in FORM GSTR-6A through the common portal after the due date of filing of FORM GSTR-1.
and As per Rule 60 Form and manner of ascertaining details of inward supplies.-
(1)The details of outward supplies furnished by the supplier in FORM GSTR-1 or using the IFF shall be made available electronically to the concerned registered persons (recipients) in Part A of FORM GSTR-2A, in FORM GSTR-4A and in FORM GSTR-6A through the common portal, as the
the case may be.
Additional Points
My View
Before this Section 16(2)(aa) Inserted Rule 36(4) is empowered by sec 43(A) but this section has not come into power so for that reason Rule 36(4) is challenged before various Authorities & High Courts.
But Now Sec 16(2)(aa) is inserted which give the power to rule 36(4) So now According to my view Rule 36(4) can not be a challenge & we should take ITC only on basis of supplier Outward detail.
Conclusion
As per my View
ITC can be take on basis of GSTR 2(A) because Sec 16(2)(aa) said that ITC will be available only when detail furnish by a supplier in Outward supplies and details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37 & As per Sec 37 Rule 59 & Rule, 60 Outward supplies detail will be made available in GSTR 2(A)
But on the safer side, we should take ITC on the basis of GSTR 2(B)
Thanks For Your Precious & Valuable Time
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Disclaimer:-
The above-referred analysis and views are purely my own view and in subjective nature so kindly take any decision and action with prior discussion and consulting with your Chartered Accountants/Advocates/Legal Consultant etc.
Author Bio
Sir,
Recently in the case of D.Y. Beathel Enterprises v. State Tax Officer (2021) 35 J.K.Jain’s GST & VR 417 (Mad) the denial of ITC by the Respondent was quashed on account of no recovery action against the seller & Non-examination of sellers as witness in the enquiry proceedings.
CA Om Prakash Jain s/o J.K.jain, Jaipur
Tel 9414300730