ITC on import of goods

[Rohit K]

Sir,

Is there any time restriction on availment of ITC on import of goods ?

As per section 16(4) input tax credit in respect of any invoice or debit note is not available for supply of goods or services or both after the thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.

In one case, a company has taken ITC on imports pertaining to FY 18-19 in the FY 20-21.

Is the company eligible to take Import ITC in the FY 20-21? Please help.

[Amit Agrawal]

Time-Restrictions prescribed u/s 16 (4) are for invoices & debit-notes and not for bill of entry against import of goods, in my view.

The words (i.e. invoice, debit-note, bill of entry etc.) have different meanings as can be seen from Rule 36 of CGST Rule, 2017.

Accordingly, Co. is eligible for subject ITC availed so availed in FY 20-21 against bill of entry bearing dates of FY 18-19. This is subject to presumption that said Co. was duly registered under GST during FY 18-19.

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

[Padmanathan KV]

Agreed with views of Ld. Amit Ji. However, kindly note that Department may try to deny and one should be prepared to litigate the matter.

[KASTURI SETHI]

If ITC is availed in this scenario, the issuance of SCN is 100% sure. Do not be victim of jugglery of words/language.

[Amit Agrawal]

Mere issuance of SCN by Dept. on any issue does not automatically mean that assessee is at fault. Past experience / records proves that the Dept's views - in majority of cases - are not upheld at tribunal & above level of courts but courts ruled in favour of assessee / taxpayer.

My legal interpretation/s are NEVER based on or influenced by what Dept's views & course of action (such as issuance of SCN) will be. My interpretation/s are based on, what I feel, is the legal position which will be upheld in courts eventually in given set of controversies.

W.r.t. subject situation under discussion, I am of the view that the assessee is on very strong legal ground to defend ITC so taken.

Note: It is always for the assessee (not only for issue under condition here, but generally speaking, for every issue where Dept. can have different / contrary views) to take final call, based on quantum involved, risk appetite, willingness to defend himself following judicial process (if so required) & so on.

These are ex facie views of mine, the same should not be construed as professional advice / suggestion. & I respect contrary views.

[KASTURI SETHI]

To cap it all , litigation is there and it is also a fact that nobody likes litigation. What the Courts decide, it is inherent in 'time factor'. Which way the winds will blow, nothing can be said at present.

[Shilpi Jain]

Agree with the views of Amit ji. Good case to fight. Even if dept in this case loses and chooses to do a retrospective amendment in law to bring BoEs also under 16(4), for past credits already availed, not much can be done as credit already availed would be vested right.

So, a good case to fight all in all.

[KASTURI SETHI]

Yes. The case is worth fighting for. In case the party gets relief from the Appellate Authority/ Courts, it will pave the way for others who are also sufferers on this issue.

AI Summary

Time limit for input tax credit may not apply to import bills of entry, permitting delayed ITC subject to registration and litigation risk. The temporal bar in section 16(4) is interpreted as applying to invoices and debit notes, not to bills of entry; therefore import ITC based on bills of entry dated in an earlier financial year can be claimed later if the taxpayer was registered in the earlier year. The Revenue may issue show-cause notices and litigate, but advisers consider the taxpayer to have a strong legal position; taxpayers should weigh risk appetite and quantum before deciding to defend such claims. Legislative clarification remains a possibility.