ITC Disallowed Under 16(4)

[Priyesh Mamnani]

My client filed GSTR-3B for January 2019 on 30.09.2020 because his GST registration was cancelled from 31.12.2018 to 16.09.2020. The client filed the return under the GST amnesty scheme, where the late fees were restricted to Rs. 500/- if the return was filed by 30.09.2020. However, the client received a demand order from GST authorities under section 73 of the CGST Act, 2017 to reverse the ITC availed under section 16 (4) as the return was filed after the due date mentioned in section 39.

In March 2023, another amnesty scheme was introduced, allowing GST registration to be revoked after fulfilling certain conditions. Additionally, there was a judgment from the Gujarat High Court (Allyssum Infra vs Union of India - 2023 (4) TMI 1123 - GUJARAT HIGH COURT), where the taxpayer's registration was revoked after a long period under the said amnesty scheme, and ITC was allowed even though the return was filed after the due date.

What are the points on which I can argue and appeal for a favorable order?

[KASTURI SETHI]

Without going through the  major contents of the SCN  as well as  Adjudication Order, it is not feasible to post grounds of appeal here. If you want  strong grounds of appeal, pl. post relevant and crucial contents of the SCN and Order-in-Original.

[Padmanathan KV]

In ALLYSSUM INFRA VERSUS UNION OF INDIA 2023 (4) TMI 1123 - GUJARAT HIGH COURT -The HC allowed the petitioner to ledge their claim of ITC pertaining to the period between the date of cancellation and date of restoration. There appears to be no finding on section 16 (4) in this case. However, in particular case, the ITC was taken in GSTR-3B belatedly and now the department has disallowed the ITC so taken as time barred under section 16 (4).

Anyhow, the issue of section 16 (4) is now pending before the Hon'ble Supreme Court. The industry is also in expectation of some relief from the Government on this aspect. Therefore, it is suggested to keep the matter alive by filing an appeal.

In the appeal you may take a plea that GSTR-3B is accepted in the portal only on payment of the cash component of tax, which is not envisaged in the Statute. If taxpayer is allowed to file GSTR-3B without paying the cash component first, the ITC could have been claimed in time. Therefore, the inability to claim ITC is due to portal induced restrictions.

[Priyesh Mamnani]

My client's ITC also pertains to the period between the date of cancellation of registration and the date of revocation. However, the GST authorities have disallowed the ITC under section 16 (4) because the return was filed after the revocation of registration, as the date of filing was after the due date.

Further, the amnesty scheme referred in the Allyssum Infra - 2023 (4) TMI 1123 - GUJARAT HIGH COURT judgement was introduced in March 2023 but our registration was revoked in 2020 i.e. before this amnesty scheme came into effect.

[KASTURI SETHI]

In view of the situation described at serial no.3 above, the issue is worth fighting.  

AI Summary

Client Challenges ITC Reversal Under Section 16(4) After Late GSTR-3B Filing Despite GST Amnesty Scheme Benefits A client filed a late GSTR-3B return under the GST amnesty scheme after their GST registration was canceled and later reinstated. Despite the late fee concession, the GST authorities demanded the reversal of Input Tax Credit (ITC) under section 16(4) due to the late filing. A Gujarat High Court case allowed ITC despite late filing under a similar amnesty scheme. Respondents suggest appealing, citing portal restrictions and the possibility of future relief from the Supreme Court. The client argues their situation is similar to the court case, but their registration was revoked before the 2023 amnesty scheme.