Filing of return by supplier for claiming ITC during FY 2018-19

[POOJA AGARWAL]

Dear Experts

Few of my clients have received GST notices disputing ITC for FY 2018-19 on the ground that theirsuppliers have filed their returns after the Cut-Off date for FY 2018-19 ie. 20 Oct 2019 ITC; though the client has taken ITC prior to 20 Oct 2019. No section is mentioned in the SCN

As per my understanding of section 16(4) provides time limit for availment of credit by recipient and has no relevance with filing of return by supplier. In fact there was no condition for FY 2018-19 regarding the supplier's return filing. Please confirm

[Padmanathan KV]

You are right. The provision of section 16(4) is for recipient to claim ITC and not for supplier to pay taxes. You have to contest the demand as there is no legal provision for the same.

[KASTURI SETHI]

The following judgement of Supreme Court (the department's SLP was dismissed) and Calcutta High Court judgement can be useful :-

ASSISTANT COMMISSIONER OF STATE TAX, BALLYGUNJGE CHARGE Versus SUNCRAFT ENERGY PVT. LTD. - 2023 (12) TMI 739 - SC ORDER 

SUNCRAFT ENERGY PVT. LTD. Versus ASSISTANT COMMISSIONER, STATE TAX, BALLYGUNGE CHARGE - 2023 (8) TMI 174 - CALCUTTA HIGH COURT

 

[POOJA AGARWAL]

Thank you for the prompt responses.

[Shilpi Jain]

I agree that the time limit in 16(4) is for recipient to take credit and also that certain conditions in section 16(2) can be fulfilled post facto also. Supplier disclosing in R1 (before introduction of 16(2)(aa)) is one such condition.

Also have a look at the decision of the Kerala HC in the case of M Trade Links - 2024 (6) TMI 288 - KERALA HIGH COURTwhich has given retrospective effect to the amendment extending time limit to avail credit.

As per this, in case your supplier has updated his R1 by 30th Nov, it should be considered as being done within time limit. This can help in defending your case.

AI Summary

Input tax credit entitlement depends on recipient claim timing, not solely on supplier's delayed return filing. The time limit to claim input tax credit applies to the recipient and not as a condition tied to the supplier's timely filing; late supplier return filing alone does not legally defeat a recipient's validly claimed credit. Judicial guidance and transitional measures accepting retrospective effect or treating timely updating of the supplier's prescribed return within extended windows as curing non disclosure may be used to defend notices disputing credit.