One of the main objectives for introduction of GST Act is to avoid the cascading effect of taxes and to ensure seamless flow of credits. The GST law contain provisions which restricts admissibility of input tax credit of goods and/or services. The admissibility including conditions for claim of ITC contained in Section 16 of the CGST Act 2017 includes time limit as well.

Provision under GST: 

In terms of Section 16(4) of CGST Act, a registered person is eligible to take credit with respect to the invoice or debit note for inward supply goods or / and services, earlier of the due date for filing of GSTR 3B for the month of September for subsequent year or filing of annual return for the period to which such invoice or debit note pertains to.

Input Tax Credit

Few issues with respect to time limit of ITC

Bill of Entry in case of Imports

In case of imports, IGST will be discharged by filing bill of entry which would be the document to claim ITC of IGST paid on imports. Rule 36 of CGST Rules 2017 prescribes the documentary requirements for claiming the ITC which include the Bill of entry as one of the documents to claim the ITC.

In terms of section 2(66) of CGST Act, ‘tax invoice’ means invoice referred in section 31 of CGST Act. This section mandates issuance of invoice or a bill of supply for every supply of goods or/and service having details of description, quantity, value of supply, tax charged there on and such other particulars as may be prescribed. This section does not give reference to Bill of entry for imports.

It is relevant to note that Section 16(4) does not mention time limit applicable for availing ITC of IGST paid through bill of entry. Bill of entry is not an invoice (or) debit note for which there is a time limit. So, restriction of time limit should not be applicable in case of Bill of Entry.

Inward supply liable to GST under RCM

In terms of Section 2(98) of CGST Act, ‘reverse charge’ means recipient is liable to pay GST on inward supply of goods or/and services as notified by government under section 9(3) or supply from unregistered person under section 9(4) of CGST Act.

In terms of section 31(3)(f) of CGST Act, registered person receiving goods or services from an unregistered person is liable to pay tax under reverse charge u/s 9(3) or u/s 9(4) and issue an invoice instead of supplier.

Section 31(3) starts with notwithstanding clause, where time limit to issue tax invoice within 30 days of provision of service is not applicable in case of inward supply, where recipient is liable to pay tax under reverse charge. Recipient issues self-invoice for payment of tax and to claim credit on such taxes paid, under section 16(2). In such case, recipient cannot be treated as supplier of goods or /and services and restriction on time limit to claim credit on taxes paid u/s 16(4) will not be applicable.

Even if restriction is applied u/s 16(4) for the time limit for availing the ITC, it shall be applicable for the year in which such invoice is raised and not from the date in which provision of inward supply of service, as GST provision does not prescribe issue self-invoice within 30 days for RCM case.

Invoice date and Time of supply

Rule 47 of the CGST Rules prescribes the time limit for issuing the invoice for supply of services which is 30 days from the date of provision of service. Section 13 of CGST Act prescribes the time of supply in case of services which is as follows –

a. In case the invoice has been issued within 30 days from the date of provision of service then the time of supply is earlier of date of invoice or date of receipt of payment.

b. In case the invoice is not issued within 30 days from the date of provision of service, then the time of supply will be earlier of date of provision of service or date of receipt of payment.

Ex:  Date of provision of service – 31/12/2019

Date of issue of invoice – 15/10/2020

Date of receipt of payment – 15/10/2020

In the above case, the time of supply u/s 13 of CGST Act is 31/12/2019 and supplier discharges the GST along with interest applicable. In such case, the question which arise is whether the time limit u/s 16(4) is applicable from the year end in which service provided i.e. 31/03/2020 or from the year end in which the invoice has been issued i.e. 31/03/2021.

In the view of author, the time limit to avail the credit should be considered based on the year to which such invoice pertains and not from the year end in which the service provided.

Tax return u/s 39

Another condition for claiming ITC is to file the return u/ 39 of CGST Act i.e. GSTR 3 which is not yet made applicable due to technical glitches and GSTR 3B has been introduced for time being in leu of GSTR 3 u/r 61(5). In case of “AAP & Company, Chartered Accountants v/s Union of India”, the Gujarat HC held that Form GSTR-3B is not a valid return under section 39 of CGST Act, 2017. However, the department has filed an appeal against the above referred decision in Supreme Court vide Union of India & Others Vs AAP And Co, in (2019-TIOL-543-SC-GST) which is pending as on date.

GSTR 3B has been introduced through CGST Rules, not through the sections. Rules cannot override the provisions of the act. Rules are just procedures to comply with the provision of the act. So, return inserted through rules cannot said to be valid return and which is disputable.

Notification No. 49/2019 CT dated 09/10/2019 has been issued after the decision of Gujarat HC, giving retrospective amendment to Rule 61(5) categorised Form GSTR 3B as a return u/s 39 of CGST Act. Such amendment cannot be held to be retrospective as it deprives the right entitled to the taxpayer. Retrospective amendment cannot undo a right which has already been vested with the tax payer and deny the benefit.

ITC to be allowed even if supplier failed to pay taxes to Government

As per section 16(2) of CGST Act, one of the conditions for claiming the credit by recipient is that the supplier should have actually paid such taxes collected to the government. Presently it is not possible to verify that whether supplier has paid the taxes collected by the recipient. Also there is an option to file the GSTR 3B with-out considering the details in GSTR 2A. Just because the supplier has not been paid the taxes, recipient cannot be denied to take the credit of the taxes paid.

Recently decision has been held in case of Arise India Limited and others Vs. Commissioner of Trade & Taxes, Delhi and others [TS-314-HC-2017(Del)-VAT] – wherein H’ble Supreme Court held that, the ITC shall be allowed to recipient, even though supplier has not paid tax collected from the assessee to the government, which is one of the condition to claim the credit of taxes paid on inward supply of goods or/and services under earlier regime also.

Conclusion:

GST is a new law which is undergoing regular amendments, clarifications and different interpretations. The government and the GST council also being very pro-active in considering the requests of the tax payers. One can hope that the liberal view is adopted in ITC as it is a beneficial provision with limited restriction on claim of ITC.

Special thanks to CA Mahadev R for inputs. The author could be reached at sudarshan@hiregange.com for any queries / feedback.

Author Bio

Qualification: CA in Job / Business
Company: Hiregange and Association
Location: Bangalore, Karnataka, IN
Member Since: 15 Apr 2020 | Total Posts: 1

More Under Goods and Services Tax

16 Comments

  1. Rajendra Jain says:

    Dear sir,
    I had forgotten to claim IGST import of single bill of entry of 2018-19. This came to notice now in 2020 while preparing for annual return of 2018-19. My account says its doubtful to claim but as per what I read and understand you can claim same as it’s not a tax invoice or debit note . Pl suggest as amount of IGST is big Rs 5 lakhs . Thanks in advance

    1. CA Sudarshan says:

      Dear Sir,

      Under section 16(2) of the CGST act, one of the conditions to claim the ITC is to have the document issued by the supplier. As per Rule 36 of CGST Rules Bill of Entry issued under the Customs act is one of the documents based on which the ITC can be claimed u/s 16(2).

      But section 16(4) which talks about the time limit to claim the ITC (i.e. within due date to file the return of September month of the subsequent year or filing of annual return for FY) does not talk about the Bill of Entry.

      So the time limit to claim the ITC on IGST paid through Bill of Entry will not be applicable.

  2. naveen kumar says:

    Sir I am paid igst of buyer another GSTIN Number for fy 2018-19 but invoice not to be amend on gst portal still so please suggest how can amend this invoice in current FY.

  3. Anjali says:

    Dear Sir,

    With new Itc system I am getting confused. With gstr 2a, i am able to view the inputs. i consulted few friends who are CA told me that its can be claimed only for the invoices you able to view in gstr 2a. I filed my own gst return 3b for month of aug today. I think I went wrong somewhere as regular amendments are making it tough for professionals & busimess to cope with understanding. Can you tell me that I only claimed the itc which I was able to view in gstr 2a whereas my purchases were high for Aug, can I claim it in sept return hopefully will be able to view it as the supplier who will filing it quaterly will also file their respective returns.
    And in case If im unable to view few purchases in oct, whats the procedure for self declaration. Ie only figures are to be put in excel or there is any system to it where I can put details regarding the invoices not reflected in gstr 2b
    Thanks in advance

    1. CA Sudarshan says:

      Dear Madam,

      As per Notification No. 49/2019 – Central Tax dated 9th October 2019, a registered person can claim the ITC only if the supplier has uploaded the invoice details in GSTR 2A. If ITC is not reflecting in GSTR 2A recipient not eligible to take the credit in excess of 10% eligible credit reflecting in GSTR 2A (as per Notification No. 75/2019 – Central Ta)
      If the supplier is filing the return quarterly basis details will be appeared on Sep 2020 unless the invoice is missed to upload by the supplier.
      As I already mentioned in my article, section 16(4) allows the registered person to take the credit within the due date for filing of Sep 3B or filing of annual return WEE.So, if your October month purchase is more and the invoice is uploaded by the supplier on a quarterly basis, such ITC can be taken on Sep 3B return.(being the last month to claim credit).
      If the details not reflecting in GSTR 2B ITC cannot be taken and no separate column in return to show as credit relating to details not uploaded by the supplier.

  4. Chaitanya says:

    1. If I want to claim input tax credit on bill of entry beyond due dates of section 16 (4), where do this credit can be shown in GSTR 9 and whether same is allowed in GSTR 9C by GST Auditors.
    Also, could you please quote any reference/notification that BOE can go beyond the due dates of Section 16 (4)
    2. In case of GSTIN is cancelled by the supplier and input credits are not reflecting in GSTR 2A. In this scenario whether department allows input tax credit.

    1. CA Sudarshan says:

      Dear Sir,

      1. Under section 16(2) one of the requirements to claim the credit is to have a valid document which includes Bill of Entry in case of Imports as per Rule 36 of CGST Rules. So based on the BOE, credit has already been claimed in GSTR 3B. Which means ITC for the period has been claimed during the year only. So, it will be disclosed in Table 6 in Form GSTR 9.
      2. Credit relating to import will be allowed in GSTR 9C, as all the conditions as required u/s 16(4) r/w rule 36 has been satisfied.
      3. A specific notification has not been issued saying the credit based on BOE can be claimed beyond the due date, but section 16(4) gives reference only to Tax invoice and Debit note to claim the credit within the due date as mentioned.
      4. If the conditions as mentioned in section 16(2) CGST Act is satisfied, then the recipient is eligible to claim the credit, as Rule 36(4) restriction to avail the credit was not applicable for FY 18-19.

      Thanks

  5. Vinod K says:

    Dear Sir,
    Though the case is pending before the Supreme Court as on date, the Department already started sending notices (ASMT-10) to the dealers for payment of tax to the extent of ITC which have been claimed late.

    1. CA Sudarshan says:

      Dear sir,

      In order not to lapse the credit, suggested to take and not to utilize such credit for payment of outward tax liability and also Interest on the same will also not applicable unless the credit is not utilized for payment of taxes.

  6. Kashinath says:

    Dear Sir,

    for the Financial year 2020-21 we received advance during FY 2019-20 whereas GST been discharged and advance received receipt been issued to the party but due to this Covid-19 we are cancelling the scheduled FY 2020-21 event whereas most the customer asking for their advance refund, so we are ready to pay them back and also the GST portion we applied by filing FORM GST RFD-01 under the category “Refund of excess payment of tax” kindly help us to understand do we need to show this refund while we file our monthly return of GSTR-1 and GSTR-3B if yes which return and under which head we need to declare this refund claimed amount kindly advice thanks.

  7. JACOB JOSEPH says:

    I think Section 16(4) need a detailed look. Section 16(4) do not apply time limit for claiming input tax. It is a general rule applicable for claiming input tax related to various years. The legislature intention is that a claim of input tax of a particular year shall not be claimed after September of next of year or filing of annual return which ever occur earlier . The Removal of difficulty Order dated 02.10.2018 is issued as clarification for claim of input tax of such additional invoices or credit notes / debit notes issued subsequently in relation to supplies effected during 2017-2018. Through this order the department permitted claim of input tax on such such additional invoices, credit notes/debit notes upto 31.03.2019. Department using Section 16(4) disallowing claim of input tax citing the reason that the returns are filed for the year 2017-2018 after 31.03.2019 , which in my opinion a wrong interpretation of Section 16(4) and ROD order dated 02.10.2018 .

    1. CA Sudarshan says:

      Dear Sir,

      As per section 172 of CGST Act, Removal of difficulties, if any difficulty is arising government shall issue the order to make provisions not inconsistent with the provision for the purpose of removing the said difficulty.
      If the intention of the government is to allow claiming of ITC beyond the time limit as mentioned in section 16(4), the same would have been issued by amending the provision through the amendment act or through the finance act.
      Also, ROD 02/2018 of CT, dated 31/12/2018 has been issued for the period only for FY 2017-18, which is the first year of implementation of the GST Act, a similar kind of ROD has not been issued for FY 2018-19.
      So, in my view, the intention of the legislature is to restrict claim the ITC beyond the time limit as mentioned in section 16(4). Kindly provide if you have any alternative view.

      1. JACOB JOSEPH says:

        Sir,
        I am sorry to disagree with you; the ROD order stated that ; 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 sub-section 1 of Section of Section 37, till the due date for furnishing details under sub-section (1) of said section for the month of March -2019.. This evidences that the recipient will be entitled to take input tax credit in respect of supplies effected during 2017-2018 , the details which should have been uploaded till March -2019 by the supplier under Section 37(1) of GST Act 2017 . Therefore, even if the returns for the period 2017-2018 are filed after March -2019 such dealers are able to take input tax credit for the inward supplies of 2017-2018 the details which should have been uploaded in GSTR 1 before March -2019 by the supplier.

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