ITC CLAIMED AFTER DUE DATE

[KAMAL SETHI]

One of my clients filed GSTR-3B for March 2020 on October 31st, 2020. Subsequently, received DRC-01 to reverse the claimed credit along with interest. This action was taken in accordance with the provisions under section 16(4), as the Input Tax Credit (ITC) can only be claimed up to October 22nd, 2020. Could you please provide guidance on this matter

[Padmanathan KV]

This issue is now pending before the Hon'ble Supreme Court.

Pls state what is the exact amount involved?

What is the exact stage of proceedings? whether any order has been passed? or are you yet to file a reply?

[KASTURI SETHI]

Sh.Kamal Sethi Ji,

(i) At present there is no remedy. The provisions of Section 16(4) of CGST Act have been held valid by the Patna High Court, Andhra Pradesh High Court & Chhattisgarh High Court.

(ii) The issuance of the SCN on this issue will be continued but will be kept pending adjudication till the decision of the Supreme Court.

(iii) In this context, see Circular No. 13/2023 dated 22.6.2023 issued by the Commissioner of State Tax, State GST Department, Thiruvananthapuram, Kerala.

[Shilpi Jain]

A weak case in my view unless any favourable verdict comes from high court/SC

[KASTURI SETHI]

Also go through Issue ID 119090.

[Padmanathan KV]

Depending on risk apitite of client and other factors inc amount involved etc, you may consider keeping the issue "alive" in some forum so that if some favourable judgement from court or policy decision from Governments comes, you maybe able to gain relief.

[KASTURI SETHI]

Time restriction had been enforced since the inception of Modvat Credit facility (March, 1986). Initially it was enforced for six months and, thereafter, changed to one year period. The reason behind such restriction was to iron out the possibility of taking credit twice or thrice on the same invoice. That was not era of high technology/computer/internet etc.

Even now in this era of high technology it is not feasible to keep track of such manipulation. So the intention of Govt. is to safeguard revenue. Keeping in view of logic and reason behind this restriction, chances of the decision in favour of the assessees are bleak.

Disclaimer : These are my personal views for academic purpose only

AI Summary

Input Tax Credit time limit restricts late claims, permitting credit reversal and interest while higher court review remains pending. ITC claimed after the statutory cut off for March 2020 returns was disallowed via DRC 01 on the basis that Section 16(4) imposes a time bar for claiming ITC; High Courts have upheld the restriction and a Supreme Court challenge is pending, so current guidance is that remedies are limited though taxpayers may keep matters alive for possible future relief.