Section 38 and Section 41

[VIGNESH]

Sir. Kindly clarify whether ITC to be availed on basis on section 38 or Section 41 both are contradictory. Section 38 says ITC claim to be on GSTR-2B, but Section 41 details ITC Claim on self assessment basis and if excess claimed shall be pay/reverse with interest. With the above two sections what implies is ITC can be claimed more than what is declared in GSTR -2B and GSTR-2B restricts ineligible ITC alone! is that correct. Kindly guide

[Amit Agrawal]

Are you referring to recently amended scenario/s (i.e. after substitution vide Finance Act, 2022 w.e.f. 01-10-2022) or earlier period's provisions?

[VIGNESH]

yes sir

[Amit Agrawal]

Sir, I have not understood your reply in the context of the query raised by me in my post at serial number 1.

[VIGNESH]

yes sir . iam referring to recently amended scenario (i.e. after substitution vide Finance Act, 2022 w.e.f. 01-10-2022)

[Amit Agrawal]

On broad level, Section 38 explains what will be made available as 'information' to recipient of supplies, including 'details of inward supplies in respect of which credit of input tax may be available to the recipient'.

And Section 41 (1) deals with availment of ITC subject to such conditions and restrictions as may be prescribed, as self-assessed. Section 41 (2) deals with a scenario where the tax payable whereon has not been paid by the supplier.

Section 38 (broadly speaking, information made available in Form GSTR-3B) is one of many facets (i.e. conditions / restrictions etc.) before one becomes eligible to avail ITC. And, same cannot be read as sole basis of taking any ITC.

And various provisions (including Section 16 & 17 as well) needs to be read harmoniously with each other (unless & until same is just not possible despite just & reasonable efforts).

Summarizing above, I do not see any apparent contradiction between Section 38 & Section 41.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[VIGNESH]

Thank u sir. in short my ITC claim need not be based on GSTR-2B. is that correct?

[Amit Agrawal]

One of the conditions to avail ITC is that such credit should be getting reflected in Form GSTR-2B for cases covered under Section 16 (2) (aa) of the CGST Act, 2017. However, any credit getting reflected in Form GSTR-2B, is not the sole criteria to be eligible to avail ITC there-against.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Shilpi Jain]

Section 38 refers to the auto drafted inward supplies statement.

Section 41 allows assessee to take credit basis the self assessment and this self assessment has to be done in accordance with the provisions of the law.

So there seems to be no contradiction and it would be required to comply with the conditions laid down in Section 16(2) of the CGST Act.

[Ganeshan Kalyani]

Self assessed credit means the credit to be claimed has been assessed by the person claiming the credit to be eligible i.e. credit satisfies the condition given in the act/rule. Self assessed doesn't mean to take credit as such.

[Padmanathan KV]

The eligibility and conditions for availing credit is contained in section 16. Under section 16(2) there are 6 clauses of which the following are relevant for our discussion here:

(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37

(ba) the details of input tax credit in respect of the said supply communicated to such registered person under section 38 has not been restricted;

(c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply;

These three clauses are placing different conditions on taking ITC and there seems to be no contradictions between them. In other words, from 01-01-2022, only ITC to the extent which is reflected in GSTR-2B can be availed and other conditions must be satisfied too.

AI Summary

Input tax credit entitlement rests on self-assessment, subject to statutory eligibility and GSTR 2B reflection conditions.
Section 38 provides auto drafted information including inward supplies reflected in Form GSTR 2B, which indicates supplies for which credit may be available but does not by itself create entitlement. Section 41 permits the registered person to avail ITC by self assessment subject to conditions and restrictions, and eligibility remains governed by Section 16 and the requirement that suppliers furnish outward supply details and tax be paid as prescribed.