ITC Eligibility under RCM

[KALLESHAMURTHY MURTHY K.N.]

A registered taxpayer has received services from an unregistered person during FY 2018-19 on which he is liable to pay tax (IGST) under RCM but no invoice was issued at the time of service received and no tax was paid. After being observed by the department in 2023, the RTP raised the invoice and paid the IGST along with interest, and at the same time availed ITC on the tax so paid under RCM on the contention that the date of invoice raised doesn’t violate Sec. 16(4). Is the RTP eligible for the ITC?

AI Summary

Taxpayer Claims ITC on Delayed Invoice; Debate on Eligibility Under Sections 16 and 17 of CGST Act. A registered taxpayer received services from an unregistered person in FY 2018-19 but did not issue an invoice or pay IGST under the Reverse Charge Mechanism (RCM) until 2023. The taxpayer then raised an invoice, paid the IGST with interest, and claimed Input Tax Credit (ITC), arguing the invoice date did not breach Section 16(4) of the CGST Act. Opinions vary on ITC eligibility: some experts argue that the taxpayer is eligible for ITC due to recent clarifications, while others caution about potential litigation under Sections 16 and 17 of the CGST Act. The 2024 budget amendment and Circular 211 support ITC claims if conditions are met, despite the delayed invoice.