Can GST under RCM that has not been charged and paid during the financial years 2017-18 to October 2024 be paid in the year 2024-25, and can Input Tax Credit (ITC) be availed for the same?
Summary: In light of recent developments in GST regulations, registered persons who have not charged and paid GST under the Reverse Charge Mechanism (RCM) from the financial years 2017-18 to October 2024 can now issue self-invoices during November 2024 and claim Input Tax Credit (ITC) for these transactions. This is based on the amendments made to Section 31(3)(f) of the GST Act and the issuance of Notification No. 20/24 on October 8, 2024. According to the amendments, a registered person must issue a self-invoice within 30 days of receiving goods or services from unregistered suppliers starting November 1, 2024. Importantly, no prior time limit existed for issuing such invoices, allowing registered persons to retrospectively self-invoice for RCM liabilities dating back to 2017. Additionally, while late payments may incur interest, the recent legal updates indicate that penalties for earlier delays might be void. Thus, registered persons can include these self-invoices in their GSTR 3B filings for December 2024, claiming the associated ITC. However, there may be legal challenges ahead regarding these claims.
It is understood that many registered persons are receiving notices for the RCM being not charged and paid for the financial years 2017-18 to 2023-24.
1) As per Sec 31(3)(f) of the GST Act,
“a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue an invoice in respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or services or both”.
Here no time limit is prescribed for raising the Invoice.
2) Sec 31(3)(f) as amended by Finance Act 2024:
“a registered person who is liable to pay tax under sub-section (3) or subsection (4) of section 9 shall [, within the period as may be prescribed,] issue an invoice in respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or services or both;”
3) In the 53rd GST Council meeting held on 22nd June 2024, the Council recommended clarifying that, in cases of supplies received from unregistered suppliers, where tax has to be paid by the recipient under Reverse Charge Mechanism (RCM), an invoice is to be issued by the recipient only. The relevant financial year for calculation of time limit for availing of input tax credit under the provisions of section 16(4) of CGST Act is the financial year in which the recipient has issued the invoice.
4) Notification no. 20/24 dated 8th October 2024 has been issued by the Government based on the above recommendation of the GST Council, which reads:
“In the said rules, after rule 47, the following rule shall be inserted with effect from the 1st day of November, 2024, namely:-
“47A. Time limit for issuing tax invoice in cases where recipient is required to issue invoice.– Notwithstanding anything contained in rule 47, where an invoice referred to in rule 46 is required to be issued under clause (f) of sub-section (3) of section 31 by a registered person, who is liable to pay tax under sub-section (3) or sub-section (4) of section 9, he shall issue the said invoice within a period of thirty days from the date of receipt of the said supply of goods or services, or both, as the case may be.”.
From the above four points, it comes to light that the time limit for issuing Self-Invoice under RCM, is 30 days from the date of receipt of the such goods or services, effective from 1st November 2024. Hence it has to be deduced that till October 2024, no such time limit was in existence for issue of self-invoice under RCM.
5) Paragraph no. 2.6 in the Circular no. 211/5/2024-GST dated 26th June 2024 mentions:
“………………In cases, where the recipient issues the said invoice after the time of supply of the said supply and pays tax accordingly, he will be required to pay interest on such delayed payment of tax.”
6) In the light of the fact that Sec. 31(3)(f) of the GST Act has been amended vide Finance Act 2024 and Notification no. 20/24 dated 8th October 2024 has been subsequently issued, prescribing a period of 30 days to issue Self-Invoice in the case of tax charged as RCM, from the date of receipt of the said supply of goods or services, effective from 1st November 2024. The intention of law is very evident and the levy of interest or penalty as mentioned in the Circular no. 211/5/2024-GST dated 26-06-2004 becomes void.
As such, in my opinion, any registered person can raise a Self-Invoice for the goods or services obtained where RCM is applicable, for any period from July 2017 till October 2024, during the month of November 2024, include the same in the GSTR 3B filed in December and claim the same as Input Tax Credit through the GSTR 3B.(May be, the case will have to be fought legally)
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