Input Tax Credit

[VIGNESH]

Dear Experts. we have claimed ITC amounting to 80,000/- for purchase of goods for the financial year 2018-2019 but the supplier has reflceted the same in his GSTR-1 but has filed the same retrun in January 2020, now the department is asking to pay the tax with interest .is that correct or can we go for appeal? kindly give reply with citations if any.

[Amit Agrawal]

Assuming that requirements of Rule 36(4) of the CGST Rules, 2017 (as amended from time to time) is duly fulfilled while taking ITC in FY 2018-19, Dept's objection is legally not tenable. It is worth noting that clause (aa) u/s 16(2) is brought into statute book only w.e.f. 01.01.2022. 

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

[KASTURI SETHI]

The objection raised by the department is worth contesting. 

[Padmanathan KV]

It is worth going for appeal.

I am presuming it is Central GST Department who has raised this demand, as I frequently see here in Kerala. They might have also quoted that supplier filed GSTR-1 beyond 16(4) hence denied.

The time limit under section 16(4) is only for taking the credit by the recipient. Since in your case you have taken credit within this time, the ITC cannot be denied because supplier has filed GSTR-1 beyond the time limit under 16(4). Moreover, section 16(2)(aa) was not in operation during 18-19.

Therefore worth going for appeal.

[Ganeshan Kalyani]

The maxim "Lex non Cogit ad impossibilia" means the law does not compel a man to do anything vain or impossible or to do something which he cannot possibly perform. Here, in your case, you don't have control over your supplier to ensure that he files his GSTR-1 within statutory time line. At the most you can advise him/her verbally or by email.

[Pradeep Reddy Unnathi Partners]

Agree with answers of the experts above

[Shilpi Jain]

Many such notices have been issued and in my view also it is contestable. Though the only issue is that the amount of expense required to contest this would be more than the demand itself.

This is the fate of many of the taxpayers today. 

AI Summary

Company Faces ITC Demand Despite Timely Claim; Experts Suggest Appeal Due to Supplier's Late Filing in 2018-2019 A company claimed an Input Tax Credit (ITC) of 80,000 for the financial year 2018-2019, but the supplier filed the relevant GSTR-1 return late, in January 2020. The tax department is now demanding payment with interest. Experts in the forum suggest that this demand is contestable, as the company met the requirements for claiming ITC within the allowed timeframe, and the supplier's late filing should not affect the claim. They recommend appealing the decision, noting that recent legal provisions do not apply to the period in question. However, the cost of contesting might exceed the demand.