DATE OF AVAILMENT UNDER GST

[SOPL SOPL]

Dear Sir/Madam

What is date of availment of input in Gst?

We have to calculate interest for not paying consideration within 180 days from date of invoice.

Do we need to consider Invoice date on which we have taken input in our books or we have to consider the date on which we have taken this input in our GSTR-3B return i.e credit to Electronic credit ledger?

FYI section 73 and 74 also uses the word wrongly availed?

Further we think that input utilized means input actually adjusted against output tax liability at the time of filing GSTR-3B return.

Eg: 1,00,000 IGST input credited to Electronic credit ledger but in that month 60,000 is utilzed and 40,000 is c/f to next month.We think 60,000 is utilized.

kindly advise.

[Narendra Nimmala]

As rightly mentioned by you, as per rule 37 of CGST rules interest is applicable from the date of availment, ie, the date on which it is availed in GST returns (GSTR 3B).

While proviso to section 50 does not cover the above mentioned scenario, if you have sufficient credit in your electronic credit ledger throughout the 180 days, then I believe you have a case for non-payment of interest on reversal of ITC.

[KASTURI SETHI]

As per Rule 37(2) of CGST Rules, interest is payable from the date of taking credit.

(2) The amount of input tax credit referred to in sub-rule (1) shall be added to the output tax liability of the registered person for the month in which the details are furnished.

[Shilpi Jain]

One aspect which needs to be considered in this case is that the interest liable under the provisions for non-payment within 180 days, is attracted merely on availing of credit. Reference to section 50 is only for the rate of interest.

In case of other provisions which make interest payable, it is generally attracted on short or non-payment of tax.

There is no requirement of any short-payment of tax arising due to this availment of credit, to attract interest in case of rule 37. So it could be said that interest would be liable irrespective of whether the said credit was utilised or not.

However, it is a known principle that interest is compensatory in nature (Pratibha Processors - 1996 (10) TMI 88 - SUPREME COURT SC) and should be liable only in case there is any loss to the department. If the credit is not utilised it could be said that no interest should be liable. But the provisions do not support the same in case of delayed payment to the vendors.

[Amit Agrawal]

Second proviso u/s 16 (2) (d) of the CGST Act, 2017 says that such ITC (i.e. where value of supply along-with taxes are not paid to the supplier within 180 days from date of invoice) will be added to recipient-assessee's output tax liability, along with interest thereon, in such manner as may be prescribed.

Said rule 37 (1) of the CGST Rules, 2017 prescribes recipient-assessee to disclose specified details for such ITC in Form GSTR-2.

And sub-rule (2) thereunder states that 'The amount of input tax credit referred to in sub-rule (1) shall be added to the output tax liability of the registered person for the month in which the details are furnished.' And sub-rule 3 states that 'The registered person shall be liable to pay interest at the rate notified under sub-section (1) of section 50 for the period starting from the date of availing credit on such supplies till the date when the amount added to the output tax liability, as mentioned in sub-rule (2), is paid.'

It is almost now certain that Form GSTR-2 will never see light of the day.

In this background, questions which comes to my mind are these:

A. Where an recipient-assessee is required to add such ITC amount to its output liability while filing Form GSTR-3B?

B. Does such disclosure is mandatory in Table 4 (b) (2) of Form GSTR-3B and if yes, on what is the legal basis to back such claim?

B. And absence of availability of prescribed manner to disclose such events (i.e. in Form GSTR-2), why assessee is required to do anything to comply with second proviso u/s 16 (2) (d) of the CGST Act, 2017? And where is question of paying any interest?

In above background, I would argue that there is nothing under current law & rules - as of now - which compels the recipient-assessee to anything about such ITC availed (i.e. where value of supply along-with taxes are not paid to the supplier within 180 days from date of invoice).

Please treat these comments more from point of brain-storming among professions.

[Shilpi Jain]

Amitji... Even if we agree to the arguments that you have put forth, one aspect we should always remember is the retrospective amendment that the Government can do and has always been doing.

Further, this is a provision which has a provision in the Act. So it will not take much time for them to add proper provisions so that the reversal is required.

Today there are so many provisions in the rules/notifications/circulars/pronounced by the AAR which the taxpayers are following, but these do not have any legal backing/power to enact in the Act.

So if we are talking of a taxpayer who does not to be too adventerous then we may have to look at how to comply with the requirement.

No doubt your arguments indicate one of the many lacunae in the law.

[Amit Agrawal]

I entirely agree with Ms. ShilpiJi. I just tried to explain the arguments that there is nothing under current law & rules - as of now - which compels the recipient-assessee to anything about such ITC availed.

And knowing the above argument are controversial, I requested to treat these comments more from point of brain-storming among professionals.

I wish to also add the followings:

It is worth noting that not all amendments brought by Govt. - to correct such lacunas - are retrospective in nature.

For example: The Central Goods and Services Tax (Second Amendment) Rules, 2019, brought vide Notification No. 16/2019 – Central Tax to rectify similar lacunas (such clause (g) u/r 42 (1), various changes in Rule 43 etc.) are prospective in nature.

But, I totally agree that these arguments are not for any conservative assesses. One must take proper risk & reward analysis before opting for such arguments. But all this may become more pertinent if any assessee failed to make such compliance voluntarily and Dept. catch his mistake after 3-4-5 years, stakes gets very high and Dept. also try to impose huge penalty etc.

These are my personal views and should not be taken as professional advice. And again, these are more from point of brain-storming among professionals.

AI Summary

Date of availment of input tax credit governs interest liability; interest runs from the date credit is taken in returns. Interest on input tax credit where supplier payment is not made within the prescribed period is applied from the date of availment of the credit, understood as the date the credit is claimed in the taxpayer's returns; reporting and adding such ITC to output liability is governed by the rules' disclosure mechanism, and current practice forces reliance on GSTR-3B and the electronic credit ledger despite gaps in prescribed procedures.