can ITC on payment of RCM for the period 2017-18 be availe avail in jan 2019

[FARIDUDDIN AHMAD]

respected sir my issue is auditors doing the audit u/s 65 of of CGST Act fixed the rcm liability on procurement of some goods and services during the period july 2017 to 12 oct 2017. payment of RCM tax along with interest and penalty of that period is done by the tax payer in jan 2023. can taxpayer avail ITC of the tax amount paid as RCM by making payment through DRC-03

[Amit Agrawal]

Ideally, if one is willing to take risks & face rigors of litigation etc. but interested to availing ITC in such a situation, same should never have been paid subject liability under RCM through Form DRC-03 with interest & penalty.

Given situation is not covered u/s 74 as ITC was available against subject tax liability under RCM & period involved was very initial stage of GST implementation in India. Hence, no penalty u/s 74 should have been paid.

One can also argue that due date of paying taxes under GST for period from July, 17 to Mar, 19 is still not lapsed and hence, interest u/s 50 (1) is also not payable.

Lastly, importantly, one should have paid subject liability under RCM - without any interest & penalty - through regular Form GSTR-3B by raising self-invoice u/s 31 now and then, take ITC against such invoice so generated now.

As said before, these line of action are for those who are willing to take risks & face rigors of litigation etc. but interested to availing ITC in such a situation

Obviously, one can never be certain about how legal jurisprudence will evolve in various issues connected with above arguments (including about time restrictions u/s 39 (9)) and only time will tell.

But now, taking ITC in given situation (where taxes are already paid under RCM with interest & penalty through Form DRC-03, based on audit objection from Dept) looks more difficult & risky.

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

[KASTURI SETHI]

This issue has been discussed so many times in this forum. It is a time-barred case.

AI Summary

Input tax credit on RCM may be barred after payment through compliance form with interest and penalty, posing litigation risk. Whether Input Tax Credit can be claimed when RCM tax for an initial GST period was paid after an audit objection through a demand-recovery form with interest and penalty, with advisors warning that claiming ITC in that situation is legally risky and that the preferable course would have been payment via self-invoice reported in the periodic return and then claiming ITC.