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

Input tax credit time limits under reverse charge may be contested when self invoice is issued late, risking denial and dispute.
Whether a belated self invoice or debit note issued by a recipient under reverse charge permits claiming input tax credit turns on the interaction between the requirement to self invoice for certain unregistered supplies, the time of supply rules and the limitation in the entitlement provision which disallows credit after the return due for September following the financial year to which the invoice or debit note "pertains." Experts disagree whether "pertains to" refers to the period of supply or to the invoice/debit note date, and practical considerations include payment of tax with interest, possible penalties, and litigation risk, with post amendment treatment of debit notes reducing but not eliminating uncertainty.