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

Input tax credit dispute: recipient's timely claim may be contestable despite supplier's late GSTR 1 filing, consider appeal. A recipient claimed Input Tax Credit in 2018-19 while the supplier filed GSTR 1 late in 2020; the recipient took credit within the recipient's statutory time and a later enacted clause conditioning credit on supplier filing was not in force for that period. Therefore a departmental demand based solely on the supplier's delayed GSTR 1 filing is contestable, though administrative notices are common and contesting may be economically disproportionate to the disputed amount.