Section 16(2) vs 16(4)

[NARENDER YARRAGORLA]

Is section 16(2) of CGST act overriding section 16(4) of CGST act?

[Satish Talnikar]

Dear Sirs,

One of the conditions of Section 16 (2) is filing of return under Section 39 i.e. GSTR-3B. The does not prohibit belated filing of GSTR-3B albeit with late fee and interest. Thus, if a tax payer, for some genuine reason, say due to financial crisis, is unable to pay the tax liability in cash and therefore, cannot file his GSTR-3B returns for whole of the financial year and files the same only after the cut-off date specified under Section 16 (4), he should be allowed to avail ITC for all the relevant months from April to March while filing the returns since it is only when he files GSTR-3B reeturns, he becomes entitled to the ITC. The law does not permit to file the return unless the entire tax liability in the return is paid. Thus, even if the tax payer wishes to avail the ITC, he is prevented from doing so. Since Section 16 (2) starts with non-obstante clause, it will have an overriding effect on Section 16 (4). In my humble opinion, Section 16 (4) is applicable only in situations where the tax payer has not availed ITC in spite of having filed GSTR-3B return. In that case, he is allowed, as per Section 16 (4), to defer availment till the specified cut off date. In short, provisions of Section 16 (4) are for deferment of availing of ITC after filing of the returns.

Kindly provide views on the above.

[ANUP BHATTACHARJEE]

Credit is taken in the month itself but return in form 3B is filed after 16(4) limitation by paying late fee . In this senerio what will happen sir?

[Tarun Agarwalla]

Yes , section 16(2) and section 16(4) appears to be separate conditions and independent of each other unless and until they contradict each other. Further section 16(4) applicability and validity is separate question altogether. Section 16(4) talk abily due date of return , where claim of credit have been made in the book of accounts and returns were filed belatedly, after the due date wether or not ITC is available? Is the question which yet to be scrutinised.

[KASTURI SETHI]

Query at serial no.22 dated 13.3.22 above has also been asked separately against Issue ID 117857 by the querist..

In this case, the return has been filed late and the department will issue SCN. However, on the basis of timely entry in the books of account ( being statutory records), relief can be hoped through Courts only. There is no other way-out. The querist has Hobson's choice.

AI Summary

Input Tax Credit eligibility requires satisfying documentary conditions and statutory time limits before a claim is allowed.
The debate focuses on whether Section 16(2)'s non obstante clause and documentary eligibility conditions (possession of invoice, receipt of goods/services, tax paid, and return filed) displace or coexist with Section 16(4)'s temporal cut off for claiming input tax credit. Contributors generally conclude that Section 16(2) provides essential documentary prerequisities to avail ITC, while Section 16(4) operates as an independent time limit that must also be satisfied; failure to comply can trigger reversal, denial of credit, or departmental show cause action.