Time Limit for reclaim of reversed ITC

[ROHIT GOEL]

Dear Sirs,

One of our clients took ITC against a certain class of expenditure belonging to FY 2018-19 in their return for September 2019 as per section 16. However, on advice of their counsel, they reversed the ITC in the return for October 2019.

Thereafter, they changed their counsel and the new counsel in Feb 2020 adviced that the ITC was in fact fully allowable and as such the client again took ITC in their return for March 2020. As per the advice of the counsel, section 16 only imposes conditions for claim of ITC by Sep 2019 and that there is no time limit for reclaim of ITC once correctly claimed by Sep 2019.

I could not find any provision which prescribes non time barring of reclaim of ITC and in my opinion, reclaim of ITC in Feb 2020 of invoice of FY 2018-19 would be time barred.

Requesting your expert opinions on this matter.

AI Summary

Reclaim of Input Tax Credit may not be time-barred when recrediting previously reversed credit, subject to reversal context.
Whether the statutory time limit for claiming input tax credit bars recrediting ITC previously taken and reversed is contested. Pre-GST Cenvat decisions and a CBIC clarification are relied on to permit recredit where credit was earlier available, on grounds that initial time limits govern fresh claims but do not prevent restoration of previously held credit. The distinction between reversals under departmental direction and voluntary reversals remains practically significant.