Eligibility of ITC

[Kaustubh Karandikar]

XYZ Ltd. received services in the year 2021 but Tax Invoice against the same received from the supplier in the year 2023 and tax invoice date also of 2023. The supplier had filed the returns and the same invoices are appearing in Return 2B also in the respective month of 2023. Can XYZ avail credit in 2023 for the services received in 2021?

[KASTURI SETHI]

What is the date of filing annual return for 21-22 ?

[Shilpi Jain]

The time limit in section 16(4) is with reference to the invoice date only. So irrespective of when the services were received, since the invoice is dated 2023, credit can be availed.

[Padmanathan KV]

Though I agree with Shilpi Ma'am on first blush, I see a possible problem here.

Section 31 reads as under:

(2) A registered person supplying taxable services shall, before or after the provision of service but within a prescribed period, issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be prescribed:

Rule 47 reads as under:

The invoice referred to in rule 46, in the case of the taxable supply of services, shall be issued within a period of thirty days from the date of the supply of service:

Provided that where the supplier of services is an insurer or a banking company or a financial institution, including a non-banking financial company, the period within which the invoice or any document in lieu thereof is to be issued shall be forty five days from the date of the supply of service:

Provided further that an insurer or a banking company or a financial institution, including a non-banking financial company, or a telecom operator, or any other class of supplier of services as may be notified by the Government on the recommendations of the Council, making taxable supplies of services between distinct persons as specified in section 25, may issue the invoice before or at the time such supplier records the same in his books of account or before the expiry of the quarter during which the supply was made.

Admittedly, the supplier has violated Rule 47 here. A question which arises here is whether Rule 47 is mandatory or directory provision? whether an invoice issued in violation of Rule 47 shall be treated as as invoice at all? In this context, the department can take a stand that Section 16(2)(a) is not satisfied here (Assuming all other conditions of section 16 is satisfied).

In such scenarios, the defense should be that It is not in the jurisdiction of the PO of recipient to adjudicate the compliance of Rule 47 by the supplier. However, one cannot rule out the possibility of litigation IMO.

[Kaustubh Karandikar]

thanks shilpi ji, padmanathan ji and kasturi ji for your views.

AI Summary

Input Tax Credit eligibility depends on invoice date; late invoices may allow credit, but supplier invoice-timing breach can jeopardize entitlement. Eligibility for Input Tax Credit turns on the invoice date: a late-dated invoice may permit credit if other statutory conditions are satisfied, but supplier non compliance with invoicing time limits may lead the tax authority to challenge whether the invoice meets the document based condition for credit, potentially provoking contested assessments despite the recipient's argument that supplier compliance is not for the recipient to adjudicate.