Non issue of invoices as per clause (f) of sub section 3 of Section 31 of CGST Act,2017

[RAKESH SHARMA]

Sir

During GST audit of 2017-18 conducted by the department,the department has raised a demand of ₹ 5 Lac on account of ITC availed by the taxpayer on account of GST paid by taxpayer under RCM.The taxpayer has paid GST first and then claimed ITC on freight and loading/unloading exps etc.

But the department has raised a demand with the reason that taxable person has availed ITC in contravention of Rule 36 of CGST Rules, 2017 by not issuing invoice as per clause (f) of subsection 3 of Section 31 of CGST Act,2017.

Please advise the course of action in this regard.

AI Summary

Input tax credit eligibility depends on invoice possession and payment to government; absence risks disallowance or penalty.
ITC taken without a supplier invoice conflicts with Section 16 documentary conditions and Rule 36; absence of an invoice can justify disallowance. If tax paid under RCM was debited from the Electronic Cash Ledger and transferred to government, taxpayer can argue no revenue loss and contest demand or seek limited penalty under Section 125. Practical remedies include reversing the ITC and re-availing it upon issuance of the invoice; where tax was not transferred to government account, disallowance and revenue-loss findings are sustainable.