Eligibility of ITC

[Kaustubh Karandikar]

In case of Services provided by Govt., the licence fee is paid to State Govt. in February’19 but GST under reverse charge paid July’19 with interest. Will this be treated in financial year 18 – 19 and ITC cannot be claimed on it or since the GST was paid in July’19, it will be treated as transaction in 19 – 20 and ITC can be claimed on it in this month?

[Atul Rathod]

Logically it should be the transaction of 18-19 but strictly going into the provision-it would be treated as transaction of 19-20 based on self invoice and there is no time limit of rasing self voucher. Credit can be allowed.

[KASTURI SETHI]

Time of supply of services is the date of payment as per Section 13(3) (a) of CGST Act. Hence ITC is not time barred. Transaction is to be accounted for in 19-20.

[Kashish Gupta]

Kindly refer to the section 31(3)(f), reproduced below:

"(f) 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;"

Therefore, legitimate liability to issue self-invoice is on the date of receipt of services. Hence, a registered person cannot take the shelter of delay made in issuance of self invoice for the claiming eligibility of input tax credit considering the transaction to be of a financial year in which self-invoice has been issued instead of FY to which it pertains.

Further, the capping of section 16(4) specifically mentions "financial year to which invoice.....pertains". This essentially clarifies the intention of law makers.

Hence, it should be considered as transaction pertaining to FY 2018-19.

AI Summary

Time of supply determines ITC claiming period; self-invoice timing and invoice-year capping decide eligibility under GST.
Eligibility to claim ITC for GST paid under reverse charge after the underlying payment turns on statutory markers: some commentators treat the transaction as occurring in the year when GST was paid and a self-invoice issued (permitted because no time limit on self-vouchers), others rely on time-of-supply principles tied to payment to allow later-year credit, while a restrictive view emphasises the obligation to issue self-invoices on receipt and the statutory capping that ties credit to the financial year to which the invoice pertains, thus treating the transaction as belonging to the earlier year.