Reversal of Input Tax Credit (ITC) allegedly claimed in violation of Section 16(4) of the GST Act

[MAHTAB KHAN]

A notice has been received requiring reversal of Input Tax Credit (ITC) allegedly claimed in violation of Section 16(4) of the GST Act for F.Y 2021-22. I have checked my GST return records and found that GSTR-3B for the month of March 2022 was filed on 07-12-2022. Is there any remedy available to me in this situation?

[Sadanand Bulbule]

Section 16 [4] of the CGST Act reads as under:

(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.

So the cut off date to claim ITC is very strict and generally the judicial courts may not support such lapse. Reversal of ITC is mandatory. No penalty is attracted if such ITC is not utilised, though interest may stiil apply.

[Raam Srinivasan Swaminathan Kalpathi]

On and after FY 2021-22 ITC availing timeline has to be adhered to as per Sec.16(4) and there is no way out. Kindly note that SC in case of ALD Automotive had firmly enunciated that ITC is only a rebate, benefit and concession to the RTP and conditions for availing ITC must be meticulously adhered to.

AI Summary

Taxpayer must reverse Input Tax Credit claimed after Section 16(4) deadline despite filing GSTR-3B late A taxpayer received a notice requiring reversal of Input Tax Credit claimed in violation of Section 16(4) of the GST Act for FY 2021-22. The taxpayer filed GSTR-3B for March 2022 on December 7, 2022, which was beyond the statutory deadline. Legal experts confirmed that Section 16(4) establishes a strict cutoff date of November 30 following the financial year for claiming ITC. The Supreme Court in a relevant case ruled that ITC is merely a rebate requiring meticulous adherence to conditions. No remedy is available for this lapse, and reversal is mandatory, though penalties may not apply if the credit wasn't utilized.