IN PUT TAX CREDIT SECTION 16(4)

[RAJENDRAN K A]

One assessee had paid tax after claiming ITC for the month of November, 2018 in GSTR 3B and filed the same on 31.12.2018 but the person has forgotten to file GSTR 1, which was filed later on 25.11.2019. now the department sent a notice that: since you have filed GSTR-3B return for the month of November, 2018 on 31.12.2018 ie after the due date as mentioned above ie 20.10.2019, you are requested to reverse the ITC amount. in the notice nothing mentioned about GSTR-1.

In my view since the ITC was availed with in the time hE is eligible eventhough he filed GSTR-1 belatedly on 25.11.2019

[KASTURI SETHI]

I have already studied this very issue thoroughly. The department is very very strong on merits. I am of view that in order to get relief for tax payers an amendment in Section 16(4) of CGST Act is required. There is no other way-out

[Rajagopalan Ranganathan]

Sir,

The return referred to in Section 39 of CGST Act, 2017 is GSTR-3B. The due date for filing GSTR-3B for November 2018 is 20.12.2018. But you have filed the said return on 31.12.2018. Please clarify what is date of payment of tax it is 20.12.2018 or 31.12.2018. If date of payment of tax is 31.12.2018 then you have to pay interest on your tax liability. I infer from your query that you have paid the tax on 31.12.2018 without interest. Therefore the Department has asked you to reverse the ITC. However in my opinion Department cannot ask to to reverse the ITC through a letter/e-mail. they have to follow principles of natural justice and issue a show cause notice requiring you to reverse the ITC giving detailed grounds for such stand of the Department.

[KASTURI SETHI]

Sh.Ranganathan Ji,

Sir, I agree with you in toto. Keeping in view of the strict stand taken by the Department, interest on gross tax liability will be recovered via Section 79 (only by way of letter) and SCNs will be issued to those tax payers whose availment of ITC is hit by Section 16(4) of CGST Act, 2017.

[Himansu Sekhar]

Before the scn an intimation calculating the amount has to be given to assessee under sec 73 and 74

[Himansu Sekhar]

Please refer rule 142(1A)

[Himansu Sekhar]

Sir

The question is not clear. Itc can be taken through GSTR-3B return filed under sec. 39. This procedure has been completed in due time. I think there is no impediment in availong the ITC. Please properly post the notice of the dept.

[KASTURI SETHI]

"The use of word, 'shall' in the statute indicates that input tax credit cannot be claimed beyond prescribed limit and it is mandatory. The assessing authority does not have power to dilute the mandatory requirement"-------------- Supreme Court in the case of ALD Automobile (P) Ltd. Vs. Commercial Tax Officer reported as 2018 (364) ELT. 3 (SC) = 2018 (10) TMI 814 - SUPREME COURT.

Input Tax Credit is a concession provided by the Legislature and not fundamental right of assessee.

AI Summary

Input tax credit entitlement under Section 16(4): belated GSTR 3B filing can prompt reversal requests absent proper procedural notice.
Input tax credit entitlement is disputed where ITC was claimed in GSTR 3B filed after the statutory due date and GSTR 1 was filed belatedly; the core question is whether GSTR 3B claim suffices or the department can require reversal. Commentary notes administrative practice of seeking reversal and interest, practitioner insistence that reversal must follow formal show cause procedure, and references to assessment intimations and Rule 142(1A), while observing the mandatory character of statutory conditions for ITC.