ITC CLAIMED BEYOND TIME LIMIT u/s 16(4)

[MAHTAB KHAN]

During scrutiny, department has alleged that ITC of ?1,39,878 (CGST Rs. 69,939 + SGST Rs. 69,939) pertaining to FY 2021-22 (March 2022) was wrongly availed because GSTR-3B for March 2022 was filed on 19-12-2022, i.e., after the last date prescribed under Section 16(4) (30th Nov 2022). Department proposes recovery under Section 73, with interest under Section 50 and penalty under Section 122.

Are there any favourable judgments / circulars / relief under Section 16(4) in such cases?

Kindly share your expert views. ??

[Sadanand Bulbule]

Refer CBIC Circular No. 237/31/2024-GST dated 15/10/2024

[KASTURI SETHI]

Relief/extension was granted up to 20-21 only. Thereafter, no such extension was granted. The departments stand is correct.

[Sadanand Bulbule]

Dear Sirji

I welcome your reply. 

[KASTURI SETHI]

Dear Sir Ji,

A huge thank you for your stamp of approval.

[YAGAY andSUN]

Given your facts for FY 2021-22, late GSTR-3B (19-Dec-22), and a flat SCN under Section 73 + interest + penalty, the chances of getting favourable judicial relief are quite limited. The statutory time-limit under Section 16(4) remains binding, and the “retroactive relief” under Section 16(5)/(6) does not extend to FY 2021-22. The assessment demand appears sustainable.

[MAHTAB KHAN]

Thank you everyone. In this case ITC was never used. Credit ledger balance always above the ITC claimed for the said period. In my opinion interest and penalty can not be demanded! 

[KASTURI SETHI]

 Dear Querist,

The issue of having sufficient balance in ECL is not in picture here at all.

Section 16(4) has been violated in this scenario. The issuance of SCN is certain.

[KASTURI SETHI]

First step is in the wrongde jure.  Taking ITC is not in letter and spirit of GST laws. Hence TAKING ITC is  being challenged by the department. Having sufficient balance in ECL is the next step.  We cannot resort to "Next Step" in view of wrong entry at the first stage/step.

[Shilpi Jain]

In case you have sufficient ITC balance since the late availment of credit till reversal no interest and penalty would be liable

[KASTURI SETHI]

In the given situation, the offence has been committed, may be unintentionally. This fact cannot be denied. The issue stands decided by the Hon'ble Supreme Court.

AI Summary

ITC claimed beyond time limit: late March 2022 ITC triggers recovery, interest, and penalty under GST provisions. ITC for March 2022 was availed after the Section 16(4) time limit; department issued an SCN proposing recovery under Section 73 with interest under Section 50 and penalty under Section 122. Administrative relief was only extended to earlier years and does not cover FY 2021-22, so the time-bar under Section 16(4) applies; sufficient electronic credit ledger balance after late availment does not negate the initial violation.