Repercussions of non-payment of invoice in GST Regime

CA C V Suryam

Repercussions when invoice is not paid by the Recipient to Supplier of goods or services or both within the specified period. 

1) If ITC is availed where full value of invoice alongwith applicable GST thereon is not paid to the supplier within 180 days from the date of invoice:-

Answer is he should reverse – If the recipient of services or goods or both fails to pay the value of invoice alongwith tax thereon within 180 days from the date of invoice to the supplier, then the recipient shall reverse the input tax credit in the month immediately after expiry of the specified period by adding to his output tax liability in that month. [Proviso to Sec.16(2) of CGST Act, 2017].

2) If part value of invoice alongwith applicable GST thereon is alone paid within 180 days and balance value not paid within 180 days:-

As per the wordings in the relevant rule, recipient is liable to reverse the ITC in proportionate to the value of invoice not paid within the specified period of 180 days from the date of invoice, in the month in which the specified period is expired. [Rule 37(1) of CGST Rules, 2017].

3) Re-availing of ITC when the invoice amount alongwith tax thereon, in full or balance amount, is paid to supplier:-

Yes, recipient is entitled for re-availing of ITC on payment of value of invoice alongwith tax thereon to the supplier, either full or balance amount , as the case may be. [Proviso to Sec.16(2)].

4) Is there any time limit to avail the ITC once value of invoice alongwith tax thereon is paid in full or balance amount of invoice, as the case may be:-

Yes, there is time limit to avail ITC in normal circumstances under which he shall not be entitled to take credit of ITC on any invoice or debit note for supply of goods or services or both –

a. After the due date for furnishing of the return for the month of September following the end of the financial year to which such invoice or debit note pertains; or

b. After furnishing of the relevant Annual Return; whichever is earlier. [Sec.16(4)]

NOTE: But the said time limit u/s 16(4) is not applicable to claim any re-availing of such credit reversed earlier under the said circumstances stated in sl. nos. 1 and 2 above.

5. Any interest is required to be paid at the time of reversal of ITC pertaining to the full value of invoice or proportionate value of invoice, as the case may be:-

Yes, interest is liable to be paid by recipient of services or goods or both for the period starting from the date of availing of credit till the date of reversal i.e., till the date when such amount of ITC is added to output tax liability.

(The author is a practicing Chartered Accountant and can be reached at cvsuryam@suryamandco.in)