Fraudulent Input Tax Credit: beneficiaries and facilitators now face penalties equivalent to tax evaded under amended GST rules.
Finance Act, 2020 amends GST law to (i) update the definition of union territory, (ii) narrow composition scheme eligibility to exclude certain services and inter State supplies, (iii) delink debit note timing from underlying invoices for input tax credit claim, (iv) prescribe retrospective power to set time and manner for transitional credits, (v) strengthen penalty and criminal provisions to hold beneficiaries and facilitators liable for fraudulent invoices and wrongful ITC, and (vi) empower jurisdictional commissioners and extend removal of difficulties order period. (AI Summary)

Transitional input tax credit: retrospective insertion of time limits into Section 140 challenges judicial grants of belated TRAN-1 claims.
The note analyses conflict between judicial rulings treating accumulated CENVAT/ITC as a vested property interest and Rule 117 time limits for filing TRAN-1 under Section 140, and the Finance Act, 2020 retrospective insertion of "within such time and" into Section 140 to validate rule-prescribed time bars. It highlights broad judicial definitions of "technical difficulty" that permitted extensions and manual filings, surveys constitutional limits on retrospective amendments, and sets out implications for taxpayers to preserve claims and pursue remedies given the amendment's potential to negate earlier favorable orders. (AI Summary)