Time limit for claiming ITC under RCM

[ROHIT GOEL]

Dear Sir,

One of our clients had paid legal fees to advocates during FY 2019-20 but excluded to deposit RCM on same. On being pointed out during GST Audit, the client has deposited the same with interest however he maintains that he is eligible to claim ITC on the same in GSTR-3B of Mar 2021 i.e. month of deposit.

The basis for same has been stated to be that as per section 31(3)(f), he is liable to self-invoice for RCM supplies from URD persons. Even though the time of supply provisions clearly mandate issue of invoice within 30 days, they do not impose upper limit. As such, in opinion of client he has self-invoiced in March 2021 and as such his claim of ITC is within time as per section 16(4) as same only restricts ITC to Sep of next year from the year in which invoice is issued.

However, in our opinion, same would be contrary to intention of law and ITC would be inadmissible u/s 16(4). What is the view of the experts regarding the same?

AI Summary

Dispute Over Late ITC Claim: Client Cites Section 31(3)(f) for Self-Invoicing, Faces Section 16(4) Time Limit Challenge A client paid legal fees to advocates in FY 2019-20 but failed to deposit the Reverse Charge Mechanism (RCM) tax. Upon audit, the client deposited the tax with interest and claimed Input Tax Credit (ITC) in March 2021. The client argues that self-invoicing under Section 31(3)(f) and the absence of an upper time limit allow the claim. Experts debate whether ITC is admissible, considering Section 16(4) limits ITC to the September following the financial year of invoice issuance. Opinions vary, with some suggesting potential litigation and others highlighting the need for clarification on the issue.