Utilisation of ITC availed

[Archna Gupta]

Dear Experts

Please give clarity on below mentioned query:

Can we utilize ITC for payment of GST liability of FY 2017-18 in the month of November 2018 if balance in credit ledger which was availed in FY 2017-18 has already been exhausted and the balance in credit ledger in current month is related to current financial year.

In other words period wise matching of ITC availed and utilised is necessary or not?

Please revert.

[KASTURI SETHI]

There is no problem or such restriction. Restriction of one year or before filing return for September was for availment and not for utilisation.

Basic criteria of utilising ITC in the course of business or furtherance of business is fulfilled in the situation explained by you.

One to one correlation is not required. ITC is your cheque and you can use it in the course of business or furtherance of business.

[Archna Gupta]

Please give the reference of section because in GST Act it is not mentioned anywhere about the utilisation of ITC which was not in existence at the time of supply of goods or services.

[KASTURI SETHI]

I have no such clear cut authority on the issue. My reply is based on the notion that duty paid through Cenvat Account is equal to payment of duty in cash. There is a judgement of CESTAT but pertaining to pre-GST era.

[DR.MARIAPPAN GOVINDARAJAN]

Section 16(4) of CGST Act provides that 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 due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Therefore the provision is applicable to taking of input tax credit and not for utilization. But the Revenue may take different view.

[KASTURI SETHI]

Nicely explained by Dr.Govindarajan Sir. I would like to add that there is no revenue loss to Govt. in this situation.

[Archna Gupta]

Thanks Dr. Govindarajan ji. I was also thinking the same that there will always be a fear that department can raise demand and deny the benefit of ITC utilised on the ground that it was not available at the time of supply.

If I am wrong please correct me.

[KASTURI SETHI]

It is not fear but phobia.

[Pavan Mahulkar]

Please go through section 49

(4) The amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act or under the Integrated Goods and Services Tax Act in such manner and subject to such conditions and within such time as may be prescribed.

But As per your scenario your liability is for the FY 17_18 & you are paying it in 18-19, Hence you have to pay interest on delayed payment and this payment of interest can't be paid through utilising the ITC credit

You have to pay the interest by crediting the cash ledger as per section 49(3) of CGST Act

[KASTURI SETHI]

There is no dispute about payment of interest through Electronic Cash Ledger. I agree with Sh.Pavan Ji.

AI Summary

Clarification on Using ITC for GST Liabilities: Not Period-Specific, But Interest on Delays Must Be Paid in Cash. A participant in a discussion forum sought clarity on utilizing Input Tax Credit (ITC) for GST liabilities of FY 2017-18 in November 2018, when the credit ledger from that year is exhausted. Experts clarified that ITC utilization is not period-specific and can be used in the course of business. One expert noted that Section 16(4) of the CGST Act pertains to availing, not utilizing, ITC, though differing views from the Revenue might exist. Another expert highlighted that interest on delayed payments must be paid in cash, not through ITC. Concerns were raised about potential departmental disputes.