Summary: The CBIC, through Circular No. 237/31/2024-GST dated 15th October 2024, clarified the implementation of subsections (5) and (6) of Section 16 of the CGST Act, 2017, providing relief to taxpayers where Input Tax Credit (ITC) had been disallowed under Section 16(4). The circular outlines various scenarios related to the availment of ITC, emphasizing that taxpayers who were initially denied ITC but are now eligible under the new provisions may seek corrective action. The circular offers guidance on how authorities should proceed in cases where investigations or proceedings are already in progress, including the filing of appeals or rectification requests. Additionally, it specifies that no refund of taxes paid or reversed ITC will be granted due to the retrospective insertion of subsections (5) and (6), ensuring clarity in the handling of such cases. The circular aims to streamline the process and provide taxpayers with a clear path to resolve issues related to ITC availment.
The CBIC vide Circular No. 237/31/2024-GST dated 15th October, 2024, has clarified the issues regarding implementation of provisions of sub-section (5) and (6) of Section 16 of CGST Act,2017.
Before understanding the implementation as provided in the circular let us refer the sub-section (4), (5) and (6) of Section 16 of CGST Act, 2017.
“(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 thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.
Provided that 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 subsection (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019.
(5) Notwithstanding anything contained in sub-section (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under section 39 which is filed upto the thirtieth day of November, 2021.
(6) Where registration of a registered person is cancelled under section 29 and subsequently the cancellation of registration is revoked by any order, either under section 30 or pursuant to any order made by the Appellate Authority or the Appellate Tribunal or court and where availment of input tax credit in respect of an invoice or debit note was not restricted under sub-section (4) on the date of order of cancellation of registration, the said person shall be entitled to take the input tax credit in respect of such invoice or debit note for supply of goods or services or both, in a return under section 39,–
(i) filed upto thirtieth day of November following the financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier; or
ii) for the period from the date of cancellation of registration or the effective date of cancellation of registration, as the case may be, till the date of order of revocation of cancellation of registration, where such return is filed within thirty days from the date of order of revocation of cancellation of registration, whichever is later.”
Please find below the summary of the circular which is tabulated for reference.
| Sr. No. | Scenario | Remedy |
| 1 | Where no demand notice/statement has been issued under section 73 or section 74 of the CGST Act | In cases, where any investigation/proceedings in respect of wrong availment of input tax credit alleging contravention of provisions of sub-section (4) of section 16 of the CGST Act has been initiated, but no demand notice/statement under section 73 or section 74 of the said Act has been issued, and taxpayers are now entitled to avail the said input tax credit under the provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act, the proper office shall take cognizance of the sub-section (5) or sub-section (6) of section 16 of CGST Act, inserted retrospectively with effect from 01.07.2017 and take further appropriate action. This also includes the cases where an intimation in FORM DRC-01A. |
| 2 | Where demand notice/ statement under section 73 or section 74 of CGST Act has been issued but no order under section 73 or section 74 of CGST Act has been issued by the Adjudicating Authority | In such cases, the Adjudicating Authority shall take cognizance of sub-section (5) or sub-section (6) of section 16 of the CGST Act, inserted retrospectively with effect from 01.07.2017, and pass appropriate order under section 73 or section 74 of the CGST Act. |
| 3 | Where order under section 73 or section 74 of the CGST Act has been issued and appeal has been filed under section 107 of the CGST Act with the Appellate Authority but no order under section 107 of the CGST Act has been issued by the Appellate Authority | In such case, the Appellate Authority shall take cognizance of sub-section (5) or sub-section (6) of section 16 of the CGST Act, inserted retrospectively with effect from 01.07.2017. |
| 4 | Where order under section 73 or section 74 of the CGST Act has been issued and Revisional Authority has initiated proceedings under section 108 of the CGST Act, but no order under section 108 of the CGST Act has been issued by the Revisional Authority | In such cases, the Revisional Authority shall take cognizance of sub-section (5) or sub-section (6) of section 16 of the CGST Act. |
| 5 | Where order under section 73 or section 74 of the CGST Act has been issued but no appeal against the said order has been filed with the Appellate Authority, or where the order under section 107 or section 108 of the CGST Act has been issued by the Appellate Authority or the Revisional Authority but no appeal against the said order has been filed with the Appellate Tribunal: | In such cases, where any order under section 73 or section 74 or section 107 or section 108 of the CGST Act has been issued confirming demand for wrong availment of input tax credit on account of contravention of provisions of sub-section (4) of section 16 of the CGST Act, but where such input tax credit is now available as per the provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act, and where appeal against the said order has not been filed, the concerned taxpayer may apply for rectification of such order under the special procedure under section 148 of the CGST Act notified vide Notification No. 22/2024 –Central tax dated 08.10.2024, within a period of six months from the date of issuance of the said notification. |
Application for rectification shall be dealt by the proper officer who had passed the order for which the said rectification application has been filed. The authority shall take the decision and pass the order within a period of 3 months from the date of application.
Where any rectification has been made by the proper officer in the order for which the rectification application has been filed, an appeal against such rectified order can be filed under the provisions of section 107 or section 112 of the CGST Act, as the case may be, within the time limit specified therein.
Further, as mentioned in Section 150 of the Finance Act (No.2) of 2024, it is pertinent to note that no refund of any tax paid or input tax credit reversed shall be granted on account of the said retrospective insertion of sub-section (5) and sub-section (6) of Section 16 of CGST Act, 2017.
Author Bio
