Availment of ITC

[vaibhav agrawal]

Registration got cancelled on 30 September, 2021 (Effective from same date) on account of non filing of monthly returns for the FY 2020-21. The said order was passed With reference to cause notice issued on 26 March, 2018 in relation to non-filing of GST return for the FY 2017-18. Returns for the FY 2020-21 was filed on 31 March, 2022 and accordingly an appeal for revocation of cancellation of registration was filed. Registration got revoked on 23 June,2022. In this regard, Whether ITC claimed in the returns filed for the FY 2020-21 shall be available ?

[KALLESHAMURTHY MURTHY K.N.]

Dear Sir,

When the competent authority considers the revocation of cancellation of the Taxpayer’s GST registration, the Taxpayer shall be entitled to claim for availment of ITC in respect of the period from the cancellation of the registration till the registration is restored, subject to the Provisions and restrictions u/s 16 and 17. 

Sec. 30 may be referred.

Also, refer to the Judgement of the Hon’ble Rajasthan High Court in 2023 (5) TMI 40 - RAJASTHAN HIGH COURT.

[KASTURI SETHI]

Dear Sir,

Still Section 16 (4) is a bottleneck.

[KALLESHAMURTHY MURTHY K.N.]

Dear Kasturi Sethi Ji

 Sir. Definitely. Sec. 16(4) is applicable. I have combinedly referred in my answer as restrictions u/s 16 and 17. 

Thank you, Sir.

[vaibhav agrawal]

Dear Kalleshamurthy Sir and Kasturi Sir, thanks for your comment.

To summarise, ITC availed in the returns (Prior to period of cancellation) which are filed after the time period prescribed in section 16(4) and 16(6) shall not be available. 

[KASTURI SETHI]

If it is so, you have taken ITC in the books of accounts within time limit but on common portal it is delayed due to late filing of GSTR-3B return. As per the Common Portal System, the date of filing GSTR-3B return is the date of availing ITC.

However, in my view still the issue is worth contesting, the books of Account being statutory records.

There is no other way-out except litigation.

[Shilpi Jain]

Sub section 6 is inserted to section 16 of the CGST Act vide the section 118 of the Finance Act, 2024 (2). Your case would fall under this provision and a plea can be taken that this is a provision which cures defect existing in the law and thereby should apply retrospectively.

“(6) Where registration of a registered person is cancelled under section 29 and subsequently the cancellation of registration is revoked by any order, either under section 30 or pursuant to any order made by the Appellate Authority or the Appellate Tribunal or court and where availment of input tax credit in respect of an invoice or debit note was not restricted under sub-section (4) on the date of order of cancellation of registration, the said person shall be entitled to take the input tax credit in respect of such invoice or debit note for supply of goods or services or both, in a return under section 39,––

(i) filed up to thirtieth day of November following the financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier; or

(ii) for the period from the date of cancellation of registration or the effective date of cancellation of registration, as the case may be, till the date of order of revocation of cancellation of registration, where such return is filed within thirty days from the date of order of

revocation of cancellation of registration, whichever is later.”.

[Yash Shah]

As per Section 16(4) of CGST Act 2017, the due date for claiming ITC in respect of any invoice or debit note is earlier of following:

(1) 30th of November following the end of financial year to which such invoice or debit note pertains

(2) furnishing of the relevant annual return

As per 1st proviso of Rule 23(1) of CGST Rules 2017, if the registration has been cancelled for the failure of the registered person to furnish returns then no application for revocation shall be filed unless such returns are furnished along with tax and applicable interest & penalty pertain to such return has been paid.

Further as per Section 16(6) of CGST Act 2017, "Where registration of a registered person is cancelled under section 29 and subsequently the cancellation of registration is revoked by any order, either under section 30 or pursuant to any order made by the Appellate Authority or the Appellate Tribunal or court and where availment of input tax credit in respect of an invoice or debit note was not restricted under sub-section (4) on the date of order of cancellation of registration, the said person shall be entitled to take the input tax credit in respect of such invoice or debit note for supply of goods or services or both, in a return under section 39,–

(i) filed up to thirtieth day of November following the financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier; or

(ii) for the period from the date of cancellation of registration or the effective date of cancellation of registration, as the case may be, till the date of order of revocation of cancellation of registration, where such return is filed within thirty days from the date of order of revocation of cancellation of registration, whichever is later."

As per 2nd & 3rd proviso of Rule 23(1) of CGST Rules 2017, all returns from the date of cancellation or effective date of cancellation as the case may be, till revocation of cancellation shall be furnished by the said person within 30 days from the date of order of revocation of cancellation

In the given case, registration was cancelled on 30 Sept, 2021 and all returns of FY 2020-21 prior to cancellation were filed on 31 March, 2022 which is before the last date for claiming ITC u/s 16(4)

Further returns from cancellation (30 Sept, 21) till revocation of cancellation (23 June, 22) need to be filed within 30 days from the date of order of revocation of cancellation. Therefore ITC claiming in those returns will be before the due date for claiming ITC u/s 16(4) (assuming the Annual return for FY 2020-21 is filed after 30 Nov, 21)

Hence, ITC claim in returns prior to cancellation and ITC claiming in returns after cancellation till revocation for FY 2020-21 are eligible for claiming (assuming all other conditions of section 16 have been satisfied)

AI Summary

GST Registration Revoked for Non-Filing; ITC Validity for FY 2020-21 u/ss 16 & 17 CGST Act Discussed. A taxpayer's GST registration was canceled on September 30, 2021, due to non-filing of returns for FY 2020-21, linked to a notice from March 2018 for FY 2017-18 non-compliance. The taxpayer filed returns on March 31, 2022, and successfully appealed for revocation, which was granted on June 23, 2022. The discussion centers on whether Input Tax Credit (ITC) claimed for FY 2020-21 is valid. Participants highlight that ITC is subject to sections 16 and 17 of the CGST Act, with Section 16(4) posing a restriction. The consensus suggests ITC may be claimed if conditions are met, but litigation may be necessary.