1. We have come across cases wherein the tax invoice on the basis of which input tax credit (ITC) is availed do not contain all the particulars as stipulated by law. As an example “place of supply” or “SAC” is not stated. Issue for the present article is whether ITC can be validly claimed on such defective invoices?
2. One of the conditions stipulated u/s 16(2)(a) of the CGST Act, 2017 for availing the ITC is that one must possess a tax invoice issued by the supplier. “Invoice” is defined u/s 2(66) to mean the tax invoice referred to in Section 31.
3. Sec.31(1) provides in the context of goods that a registered person supplying taxable goods shall issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particulars as may be prescribed. Similarly Sec. 31(2) provides in the context of services that a registered person shall issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be prescribed.
4. Sec. 33 further provides that the amount of tax must be prominently indicated on the tax invoice.
5. Rule 46 of the CGST Rules, 2017 further stipulates the particulars which must be contained in the tax invoice. Same are as follows:
|a. name, address and Goods and Services Tax Identification Number of the supplier;
b. consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters- hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year;
c. date of its issue;
d. name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient;
e. name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is unregistered and where the value of the taxable supply is fifty thousand rupees or more;
f. name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is unregistered and where the value of the taxable supply is less than fifty thousand rupees and the recipient requests that such details be recorded in the tax invoice;
g. Harmonised System of Nomenclature code for goods or services (subject to the exemptions granted);
h. description of goods or services;
i. quantity in case of goods and unit or Unique Quantity Code thereof;
j. total value of supply of goods or services or both;
k.taxable value of the supply of goods or services or both taking into account discount or abatement, if any;
l. rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
m. amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess);
n. place of supply along with the name of the State, in the case of a supply in the course of inter-State trade or commerce;
o. address of delivery where the same is different from the place of supply;
p. whether the tax is payable on reverse charge basis; and
q. signature or digital signature of the supplier or his authorised representative
6. Rule 36(1) provides that ITC can be availed on the basis of an invoice issued by the supplier of goods or services or both in accordance with the provisions of section 31
7. With the above background, Rule 36(2) further provides as under:
“(2) Input tax credit shall be availed by a registered person only if all the applicable particulars as specified in the provisions of Chapter VI are contained in the said document, and the relevant information, as contained in the said document, is furnished in FORM GSTR-2 by such person.”
8. Hence two conditions have been imposed via the above provision with respect to the tax invoice on the basis of which ITC is availed. First is that the invoice must contain all the applicable particulars and second is that FORM GSTR – 2 must be furnished.
9. Now readers are well aware that furnishing of FORM GSTR – 2 has been suspended indefinitely. New forms of the returns will be announced in due course. Hence the second condition stated above cannot be met.
10. Can an assessee be made liable to fulfil a condition which he cannot fulfil ?? An issue arose before the Gujarat High Court in the case of M/s. Rolcon Engineering Co. Ltd. vs. The State of Gujarat (2006) 21 VST 117 in the context of Sales Tax Incentive Scheme. As per the said Scheme upon the investment for erection of windmill and to generate electricity, the sales tax incentives were offered. In the scheme one of the conditions was that the entrepreneur had to run the wind farm satisfactorily at least for six years from the date of commissioning, and if he does not run in that case the tax benefit availed would become recoverable. Before the said period was over a devastating cyclone hit the coastal areas of Saurashtra in June 1998 where the wind farm was located and destroyed the said wind farm. Authorities took a view that the benefits becomes recoverable since the assessee has violated the condition by not running the wind farm continuously for at least six years. Court observed that the condition incorporated deals with the voluntary action on the part of the industrial undertaking. The said clause can be invoked for withdrawal of the benefits if it is found that either deliberately or due to gross negligence on the part of the industrial undertaking, the wind farm was not kept in running condition. The Court, therefore, took the view that if the act of discontinuation of generation of electricity is deliberate or voluntary, then only the concerned industrial undertaking should be deprived of the benefit availed under the scheme.
11. Applying the ratio of above decision we are of the view that as far as second condition is concerned of furnishing GSTR – 2, ITC cannot be denied due to non-furnishing of the same as the said form has been suspended and thus there is no deliberate act on the part of the registered supplier to not furnish the same.
12. Coming to the first condition, it is stated that the invoice must contain “all the applicable particulars”. Hence said condition if strictly construed would mean that if the necessary particulars (e.g. Place of supply or SAC, as applicable) are not stated in the tax invoice, ITC cannot be claimed on such invoice.
13. One may also note that the proviso to Rule 9(2) of the erstwhile CENVAT Credit Rules, 2004 provided that even if the prescribed particulars are not contained in the document, CENVAT Credit can still be availed subject to the condition that the goods have been received and accounted for in the books of accounts. There is no similar proviso in the CGST Rules.
14. Hence we suggest that one must be very careful and ensure that all the requisite particulars are stated in the tax invoice before claiming the ITC.
15. Before we part, we must say that we are also conscious of the fact that the substantial benefit cannot be denied due to minor technical lapse. There are number of decisions on the said principle. One may refer to a decision of Hon. Gujarat High Court in the case of Commissioner of Central Excise v. Dashion Ltd. (2016-VIL-34-GUJ-CE). In this case one of the ground for not allowing CENVAT Credit was that the assessee had not registered itself as an ISD. Court observed as under:
“7. The second objection of the Revenue as noted was with respect of non-registration of the unit as input service distributor. It is true that the Government had framed Rules of 2005 for registration of input service distributors, who would have to make application to the jurisdictional Superintendent of Central Excise in terms of Rule 3 thereof. Sub-rule (2) of Rule 3 further required any provider of taxable service whose aggregate value of taxable service exceeds certain limit to make an application for registration within the time prescribed. However, there is nothing in the said Rules of 2005 or in the Rules of 2004 which would automatically and without any additional reasons dis-entitle an input service distributor from availing Cenvat credit unless and until such registration was applied and granted. It was in this background that the Tribunal viewed the requirement as curable. Particularly when it was found that full records were maintained and the irregularity, if at all, was procedural and when it was further found that the records were available for the Revenue to verify the correctness, the Tribunal, in our opinion, rightly did not dis-entitle the assessee from the entire Cenvat credit availed for payment of duty. Question No.1 therefore shall have to be answered in favour of the respondent and against the assessee.”
16. Hence for minor technical lapses with respect to the particulars of the invoice, ITC cannot be denied since such lapses are “curable defects”.