GST ITC Eligibility

[Ethirajan Parthasarathy]

Sec.16(2)(aa) of the CGST Act which limits ITC eligibility only to the extent of what is reported in GSTR 2A of the recipient comes into force w.e.f 01/01/2022

My query is whether above condition applies to ITC eligibility for the month of Dec’21 (for which return will be filed in Jan’22)

[Rajagopalan Ranganathan]

Sir,

In my opinion any return filed after 01.01.2022 is subject to the provisions of Section 16 (2) (aa) even though the return petains to period earlier to 01.01.2022.

[Rajagopalan Ranganathan]

Sir,

Read "pertains" instead of "petain"

[KASTURI SETHI]

I am also of the same view as opined by Sh.Ranganathan, Sir.

[Shilpi Jain]

It should apply for credit availed on or after 1.1.22.

Credit whether to be considered as availed in return or in books?

This would decide whether it would be Jan or dec credit...

[Amit Agrawal]

Restrictions for availing ITC by linking it with uploading details by the suppliers under sub-section (1) of section 37, was first time brought vide Notification No. 49/2019 – Central Tax dated 09.10.2019.

Consequently, CBIC had issued circular bearing No. 123/42/2019– GST dated 11th November, 2019 by using powers conferred under section 168(1) of the CGST Act and clarified that 'The restriction of 36(4) will be applicable only on the invoices / debit notes on which credit is availed after 09.10.2019' while answering question at serial No. 1.

In other words, as per CBIC, said restrictions were definitely not applicable for ITC availed for the month of Sept, 2019 and reported while filing return by 20th October, 2019.

[Amit Agrawal]

I understand that issue whether 'Date of taking ITC' is 'Date of Filing Return' is contentious issue. And it is better to avoid disputes in such matters to the extent possible (specially if ITC can be claimed next month).

It is better to avoid taking risk/s specially when rewards are not commensurate with risks so taken.

[Amit Agrawal]

On core issue, I hold a personal view that date of taking ITC in a particular month' is not equated with 'date of actual filing of GSTR-3B return for such month'.

[KASTURI SETHI]

Sh.Amit Agrawal Ji,

Sir, I agree with your views expressed at serial nos.6 & 7 above. I further add that the date of taking ITC in books of Account (being statutory records) cannot be brushed aside.If ITC is taken in GSTR 3B and the same is reflected in 2A in Common Portal but the goods have not been physically received, then credit will not be allowed despite entry in books of accounts.

However, if all the conditions are fulfilled as per Sections 16 & 17, the date of taking ITC in books of account should be preferred to the date of taking ITC in GSTR 3B, regarding the time limitation.

[CA Hemanth Kumar]

Department can say since the availment of credit will take place only when returns are filed, credit availed on or after 01.01.2022 this provision may apply.

[KASTURI SETHI]

Yes, Sir. On or after 1.1.22 means ITC may pertain to the invoices issued in December,21 or for earlier period. The assessee has to be cautious and pro-active in order to avoid avoidable rigours of litigation.

[Shilpi Jain]

It is a settled principle under CENVAT that the eligibilty to the credit has to be seen on the date of receipt of the goods or services. Going by this, on the date of receipt of goods / services, if this provision 16(2)(aa) or complete matching with 2B and 3B, did not exist then there is no requirement to follow the said provisions for receipts before 1.1.2022.

Though this view is prone to dispute by the department for sure, who go by the circulars issued as per their understanding.

[CA Hemanth Kumar]

Agree with the views of Sri. Kastuti Sethi Sir

Under service tax payment of ST wil happen on monthly/quartarly and filing of returns on Half yearly. There is no requirement to file monthly returns to show our credit eligibility, thereby what was there as per purchase register will be our eligible credit.

However when it comes to GST we need to show our eligible credit in 3B otherwise we cant say it as availement of credit as per the existing provisions in my view. Thereby whenever we are availing the credit, we need to comply the provisions existing as on that date.

AI Summary

ITC eligibility linked to GSTR-2A: whether the rule applies based on return filing date or date credit is availed.
Whether Section 16(2)(aa) limiting ITC to amounts appearing in GSTR-2A applies to credits claimed in returns filed on or after 1 January 2022 for earlier periods is contested. Contributors differ on whether the controlling date is filing date, date of availing credit in GSTR-3B, or date of taking credit in statutory books; reference is made to a prior notification and CBIC guidance treating the restriction as applicable only where credit was availed after the notification's effective date.