ITC of Tax paid u/s 9(4) on supply received after 12/10/17

[DURGADUTT DUBEY]

As we all know that rcm u/s 9(4) was suspended by the government vide notification no. 38/2017 dated 13/10/2017, but, what if we have mistakenly paid tax on supplies received from unregistered party after 12/10/17 and the same has been availed as ITC in the return. Are we entitled to take credit of such paid tax ?

[KASTURI SETHI]

NOT allowed. Such tax has been paid without any authority of law. You cannot claim refund as it is time barred now. A period of two years has elapsed.You will have to reverse ITC taken with interest. If you reverse with interest before the issuance SCN you can save penalty.

AI Summary

Input Tax Credit retention after suspended reverse charge is not permissible; ITC must be reversed with interest to avoid penalty. Whether input tax credit can be retained where tax under section 9(4) was paid after suspension of reverse charge; such credit cannot be lawfully retained because the tax was paid without statutory authority, refund is time-barred, and the ITC must be reversed with interest to avoid penalty if done before a show-cause notice.