Section 16(4)

[Komal Agarwal]

GSTR-1 and GSTR-3B from June 2018 to March 2019 filed in January 2020. SCN U/s 73 issued by department indicating violation of section 16(4) of CGST Act, as the last date for claiming the ITC for FY 2018-19 was 20/10/2019 (Sept-2019 3B return file due date). Department SCN is for reversal/payment of ITC claimed of Rs 9.46 lac during the above period plus applicable interest. Presently, the credit ledger balance is nil.

Department personal is not ready to consider our claim of ITC. Is there any case law in our favour. Is any other remedy available ?

Thanks

[Alkesh Jani]

Shri

In this case, the decision of the two high court is in favour of department, therefore, department may not file appeal against such orders. For taxpayer, there are appeals before Hon'ble Supreme court of India. We need to wait till the out come of the case. 

Meanwhile, you can contest the SCN with proper presentation and after the decision of the First Appellate Authority, seek stay from the High Court.

Please take advice of an expert before taking any decision in the matter.

Thanks

[Amit Agrawal]

Please ignore my earlier post. 

Some of potential legal arguments:

A. 'Due Date' of filing return u/s 39(1) for the period from July, 17 to Mar, 19 is not yet lapsed considering various notifications issued in those period which is extended time-limit to file return u/s 39 (1) (For examples: Notification No. 58/2017-Central Tax, dated 15th November, 2017, Notification No. 44/2018-C.T., dated 10-9-2018, as amended from time to time). These notifications are not withdrawn till date.

A1. Thus, there is no delay by your client in filing returns in Form GSTR-3B for the period from June, 2018 to March, 2019. 

B. As per Section 39(10), a registered person is not be allowed to furnish a return for a tax period if the return for any of the previous tax periods has not been furnished by him.

B1. As due date of filing returns for period till March, 2019 is still not lapsed, due date of filing return for Sept, 2019 - for the purpose of Section 16(4) - cannot be earlier than 'actual date of filing returns by your client for the period till March, 2019'.

B2. Due date of filing annual return for FY 2018-19 was 31.03.2020 and your client must have filed it (if applicable) after 'filing form GSTR-3B/s for Jun, 18 to Mar, 19 in January, 2020'.

B3. In view of above, ITC for the period from June, 2018 to March, 2019 is taken by your client within the time-limit permitted u/s 16(4). 

Please note that these arguments should not be taken as my views / opinion per se. But same are just some line of argument/s if you want to contest the demand. As jurisprudence of GST law is at nascent stage and still evolving, these arguments will be thoroughly tested in courts of law over a period in future.

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

[Amit Agrawal]

For the query raised, one of  the recommendations  of 53rd GST Council Meeting held on 22-06-2024, is worth noting and same is as follows:

"In respect of initial years of implementation of GST, i.e., financial years 2017-18, 2018-19, 2019-20 and 2020-21:

The GST Council recommended that the time limit to avail input tax credit in respect of any invoice or debit note under Section 16(4) of CGST Act, through any return in FORM GSTR 3B filed upto 30.11.2021 for the financial years 2017-18, 2018-19, 2019-20 and 2020-21, may be deemed to be 30.11.2021. For the same, requisite amendment in section 16(4) of CGST Act, retrospectively, w.e.f. 01.07.2017, has been recommended by the Council."

Attention is also invited to the Note from Press Release: The recommendations of the GST Council have been presented in this release containing major item of decisions in simple language for information of the stakeholders. The same would be given effect through the relevant circulars/ notifications/ law amendments which alone shall have the force of law.

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

AI Summary

Show Cause Notice Issued for Late GSTR-1 and GSTR-3B Filing; Section 16(4) CGST Act Violation Discussed A discussion on a forum addresses a query regarding a Show Cause Notice (SCN) issued for a violation of Section 16(4) of the CGST Act. The taxpayer filed GSTR-1 and GSTR-3B returns late, leading to a demand for reversal/payment of ITC claimed. Replies suggest potential legal arguments, including extended due dates for filing returns and recommendations from the GST Council. The advice includes contesting the SCN with proper representation and seeking a stay from the High Court. It is recommended to consult an expert for professional advice, as the GST law is still evolving.