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GSTR 3B─Reversal of ITC─Late filing of Return

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GSTR 3B─Reversal of ITC─Late filing of Return
By: OmPrakash jain
May 2, 2020
All Articles by: OmPrakash jain       View Profile
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One of the condition for avillment of ITC u/s 26(2), CGST Act, 2017 is “furnishing of return u/s 39”. This clause nowhere mentions “timely submission of returns and/or debarring rectification of any return belatedly, for being entitled to avail ITC. The “notwithstanding clause”, in the section 16(2) means that it supersedes all the sub-sections of section 16, per decision of the cases  in Central Bank of India v. State of Kerala 2009 (2) TMI 451 - SUPREME COURT & Synergy Fertichem Pvt. Ltd. v. State of Gujarat & Ors. 2020 (2) TMI 1159 - GUJARAT HIGH COURT

As such, in our view, if a registered person has furnished returns &/or rectified any return belatedly, he is entitled to ITC irrespective of section 16(4) CGST Act, 2017 and his vested right per SC Judgment in Eicher Motors Ltd. v. Union of India 1999 (1) TMI 34 - SUPREME COURT, can not be withdrawn in the absence of a clear legal prohibition, by framing rules, which are procedural in nature and can not be construed as a mandatory provisions per decisions of the case in  Adfert Technologies Pvt. Ltd. v. Union of India (P&H) [2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT], which has been endosed by the SC in UNION OF INDIA & ORS. VERSUS ADFERT TECHNOLOGIES PVT. LTD. [2020 (3) TMI 188 - SC ORDER]. Moreiver, the Govt. has no legal authority to retain the amount of credit to which the respondent in the present case is entitled to and retention of it by the Govt., cannot be sustained, being violative of Article 265 of the Constitution of India per decision of the case in JAKAP METIND PVT LTD. VERSUS UNION OF INDIA THROUGH THE SECRETARY AND 6 OTHER (S) [2019 (11) TMI 710 - GUJARAT HIGH COURT]

In view of the above, in our view, ITC is not required to be reversed.

CA Om Prakash Jain

Jaipur

9414300730

opjain02@yahoo.co.in..

 

By: OmPrakash jain - May 2, 2020

 

Discussions to this article

 

Section 16(4) of CGST Act, 2017- 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 due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

This decision has been upheld by Supreme Court as given below in MRF LTD. Versus DEPUTY COMMISSIONER (CT)-III, CHENNAI

USA Agencies Versus Commercial Tax Officer, Attur [2014 (305) E.L.T. 404 (Mad.)] = 2013 (8) TMI 532 - MADRAS HIGH COURT- Section 19(11) restricts the entitlement to avail the credit if same is not claimed within the time limit. As per Section 19(11)- In case any registered dealer fails to claim input tax credit in respect of any transaction of taxable purchase in any month, he shall make the claim before the end of the financial year or before ninety days from the date of purchase, whichever is later. Held that Input Tax Credit (ITC) being in the nature of concession. ITC cannot be said to be a vested or an indefeasible right. There may be any genuine hardships for the dealers, it is for the Legislature to intervene and make suitable amendment and not for this Court to do so. Section 19(11) is not Procedural. Section 19(11) ibid is a pre-condition imposed for availment of concession. Entitlement to avail ITC being created by the Act. Section 19 ibid is a substantive provision and not a machinery provision. Section 19(11) ibid does not operate as an embargo. Section 19(11) is not directory but mandatory. Intention of the Legislature to Restrict Credit if not claimed within Time Limit. Section 19(11) is not unreasonable or discriminatory. Regulation of availment of Input Tax Credit (ITC) is within the powers of legislative competence.

By: Rachit Agarwal
Dated: 02/05/2020

Sh.Jain Ji,

With due regard, I differ with you. No need to explain further.

By: KASTURI SETHI
Dated: 02/05/2020

My main emphasis is on Section 16(2), CGST Act, 2017 which laid down

4 conditions for availment of ITC & starts with notwithstanding clause meaning thereby that it supersedes sub-section 4 of section 16, based on the following cases;

(2020) 33 J.K.Jain’s GST & VR 9 = 2019 (12) TMI 1213 - GUJARAT HIGH COURT Synergy Fertichem Pvt. Ltd. v. State of Gujarat (Guj), A.C.T.O. v. Laxmi Misthan Bhandar (Raj) 1988 (4) TMI 418, Central Bank of India v. State of Kerala 2009 (2) TMI 451 (SC), Madhav Rao Jivaji Rao Scindia v. Union of India and another 1970 (12) TMI 87

Beyond this, no more conditions can be put under GST Act by framing rules or otherwise. Quoting Judgments of other courts will be beyond legislature in this regard.

ITC is a vested property right under Article 300A, Constitution of India per recent judgment in Union of India & Ors. v. Adfert Technologies Pvt. Ltd. (2020) 33 J.K.Jain’s GST & VR 147 (SC). Previously also, ITC/CENVAT Credit was held to be a vested right, which can not be allowed to be lapsed vide case laws─1999 (1) TMI 34 Eicher Motors Ltd. v. Union of Ind (SC), (2019) 32 J.K.Jain’s GST & VR 267 Siddharth Enterprises v. The Nodal Officer & Ors. (Guj)*.

*The review petition filed by the Govt. has been dismissed by the court (2020) 33 J.K.Jain’s GST & VR 160 = 2020 (2) TMI 1240 - GUJARAT HIGH COURT Nodal Officer & Ors. v. Siddharth Enterprises (Guj).

I hope my view points are explicitly clear.

CA Om Prakash Jain

Jaipur

9414300730

opjain02@yahoo.co.in

By: OmPrakash jain
Dated: 02/05/2020

Sir,

I request you to kindly give me citation of Supreme court case of MRF LTD. Versus DEPUTY COMMISSIONER (CT)-III, CHENNAI on GST ActS.16, as mentioned by you.

To my knowledge there is no any such case of SC on S.16(4), GST Act.

I reiterate that Beyond legislature, no more conditions can be put under GST Act, 2017.

Putting any more conditions without support of legislature would be against the Ratio decidendi of Supreme court.

As such, the reversal of ITC is illegal.

CA Om Prakash Jain

Jaipur

9414300730

opjain02@yahoo.co.in

By: OmPrakash jain
Dated: 02/05/2020

I differ with the article. I am citing the following decision:

2018 (364) E.L.T. 3 (S.C.) = 2018 (10) TMI 814 - SUPREME COURT ALD AUTOMOTIVE PVT. LTD. Versus COMMERCIAL TAX OFFICER

2002 (142) E.L.T. 5 (S.C.) = 2002 (5) TMI 49 - SUPREME COURT OSRAM SURYA (P) LTD. Versus COMMISSIONER OF CENTRAL EXCISE, INDORE

2003 (155) E.L.T. 14 (S.C.) = 2003 (3) TMI 121 - SUPREME COURT SAMTEL INDIA LTD. Versus COMMISSIONER OF CENTRAL EXCISE, JAIPUR

By: Himansu Sekhar
Dated: 02/05/2020

Sh Kasturi Sethi ji,

I request you to please quote Judicial/Legal grounds in support of your different opinion.

CA Om Prakash Jain

Jaipur

9414300730

opjain02@yahoo.co.in

By: OmPrakash jain
Dated: 03/05/2020

Respected sh.Himansu Sekhar ji,

I do agree with you that by putting a condition of limitation no vested right is taken away.

The cases quoted by you pertains to Tamil Nadu Value Added Tax Act, 2006 - Section 19(11), which prescribed the Time limit for Input Credit claim under the TN VAT Act itself. As such its compliance ia a must so far as Tamil Nadu Value Added Tax Act, 2006.

In the para 32, 36 of the SC case ALD AUTOMOTIVE PVT. LTD. = 2018 (10) TMI 814 - SUPREME COURT, quoted by you, it has been clearly mentioned by th SC that the concession can be received by the beneficiary only as per the scheme of the Statute. The Scheme under the TN VAT Act (The Act before the SC) specifically provided that the party shall make the claim within the stipulated period.
36, 38,

40, 42 of Madras High Court quoted by you also support the same view under TN VAT Act.

In the second case of OSRAM SURYA (P) LTD. = 2002 (5) TMI 49 - SUPREME COURT & third case of SAMTEL INDIA LTD.. = 2003 (3) TMI 121 - SUPREME COURT quoted by you pertains to Central Excise Rules, wherein under the Act there was no such time limit as a condition for availment of ITC. As such the time limit prescribed by the rule was valid.

In contrast, no such condition of time limit, has been put in under all the 4 conditions put in by the legislature for availment of ITC u/s 16(2) GST Act, which also contains a notwithstanding clause, meaning thereby that it supersedes S.16(4), GST Act as per decided cases of SC quoted by me. Beyond this, no more conditions can be put under GST Act, for availment of ITC, since otherwise, it will be against the legislative provisions.

Kindly permit me to quote some ratio decidendi of Supreme Court as under hovering around interpretation of Statute:

It is settled proposition of law that taxing statutes are to be interpreted literally per SC Case law of State of Karnataka v. M.K. Agro Tech Pvt. Ltd. (2017) 28 J.K.Jain’s GST & VR 162 = 2017 (9) TMI 1308 - SUPREME COURT and nothing could be added to what is stated in the statute itself per SC Case law of Eureka Forbes Limited v. State of Bihar and Ors. (2011) 16 J.K.Jain’s Vat Reporter 120 = 2014 (7) TMI 235 - SUPREME COURT. The court only interprets the law within the four corners of the Act and cannot legislate it under the disguise of interpretation. In case a provision of law is misused and subjected to the abuse of process of law, it is for the legislature to amend, modify or repeal it per SC Case law of Vemareddy Kumaraswamy Reddy v. State of A.P. (2006) 6 J.K.Jain’s Vat Reporter 25 = 2006 (2) TMI 640 - SUPREME COURT. Every taxing statue including, charging, computation and exemption clause (at the threshold stage) should be interpreted strictly per SC Case law of Commissioner of Customs v. Dilip Kumar and Company (2018) 30 J.K.Jain’s GST & VR 105 = 2018 (7) TMI 1826 - SUPREME COURT.

CA Om Prakash Jain

Jaipur

9414300730

opjain02@yahoo.co.in

By: OmPrakash jain
Dated: 03/05/2020

Dear sir,

thanks for appreciating that ITC availment is not a vested right

TN VAT decisions are pertaing to limitations for Input tax credit availment. Vat has been merged with Gst. Just like cenvat credit decisions are referred in Gst act, the VAT decisions can be applied for similar situations. Your contentions in this regard appears to be incorrect. In many cases during the service tax cases , Vat decisions were also cited.

Further the Act is different from the subordinate legislations. When such sections are not declared Ultra vires by the Hon'ble Supreme Court, the provisions hold ground even if some decisions are given distinguishing the said law.

In the present case the law is clear,simple,unambiguous and is squarely applicable to each registrants. Further no decision against such provision has been delivered till date. The credit is not admissible

By: Himansu Sekhar
Dated: 03/05/2020

Respected sh.Himansu Sekhar ji,

I reiterate my humbly submissions that “every taxing statue including, charging, computation and exemption clause (at the threshold stage) should be interpreted strictly, per Ratio decidendi of the Supreme Court as decided in the case of Commissioner of Customs v. Dilip Kumar and Company (2018) 30 J.K.Jain’s GST & VR 105 = 2018 (7) TMI 1826 - SUPREME COURT.

Further the subordinate legislations should always be in tune with the Governing Act. That is why recently, the Govt. amended S.140, GST Act retrospectively to legalise Rule 117, in view of various decisions Fvg. Assessee.

Similarly many notfns/circulars have been declared unconstitutional by different High Courts under GST regime.

As such, when there are no conditions for timely submission of return in S.16(2), GST Act, how you can take shelter of decided cases in other Acts, as quoted by you containing different provisions/conditions.

I reiterate that as per recent decided case of Synergy Fertichem Pvt. Ltd. v. State of Gujarat (Guj) (2020) 33 J.K.Jain’s GST & VR 9 = 2019 (12) TMI 1213 - GUJARAT HIGH COURT, A.C.T.O. v. Laxmi Misthan Bhandar (Raj) 1988 (4) TMI 418, Central Bank of India v. State of Kerala 2009 (2) TMI 451 (SC), S.16(2) supersedes S.16(4) due to notwithstanding clause. As such in my view, no ITC Reversal is needed for late filing of return after paying Late Fee u/s 47, GST Act, 2017 under the shelter of S.16(4).

As such, the reversal of ITC is illegal.

CA Om Prakash Jain

Jaipur

9414300730

opjain02@yahoo.co.in

By: OmPrakash jain
Dated: 03/05/2020

Dear Sh.Om Prakash Jain Ji,

I take the shelter of any case law only when any law is not clear to me. Each case has its own facts and circumstances. I avoid over-dependence on judgements. We should have confidence on our knowledge of law and its interpretation. We should put ourselves in the assessee's shoes (empathy).

By: KASTURI SETHI
Dated: 03/05/2020

Sh Kasturi Sethi ji,

By putting ourselves in the assessee's shoes and extending our knowledge/ interpretation of GST law, I reached to the conclusion that the reversal of ITC is illegal in case of Late filing of return, in view of the specific 4 conditions laid down in S.16(2) of the GST ACT.

Case laws were incorporated to substantiate the conclusion of GST Law and to clarify the confusions, if any.

In case you feel that I have misinterpreted the provision of GST law, please let me know so that I may correct myself and spread the knowledge accordingly through TMI Platform.

By: OmPrakash jain
Dated: 03/05/2020

Dear Om prakasji,

I respect your views and I refrain from further discussions. Kasturi sir has rightly delivered his opinion. Act is supreme and we have to opine naturally. When law is clear, I feel taking reference of any decision is not justifiable.

thanking you

By: Himansu Sekhar
Dated: 03/05/2020

Sh.Himansu Sekhar Ji,

Everybody has fundamental right to differ. I follow the proverb, "too many cooks (case laws) spoil the broth." Thanks & regards.

By: KASTURI SETHI
Dated: 03/05/2020

Recent Decision of Bombay High Court in case of JCB Limited = 2018 (4) TMI 585 - BOMBAY HIGH COURT and Nelco Ltd = 2020 (3) TMI 1087 - BOMBAY HIGH COURT has extensively dealt with case of Mafatlal Industries = 1996 (12) TMI 50 - SUPREME COURT, Dai Intchi Kankaria = 1999 (8) TMI 920 - SUPREME COURT, Supreme Court in case of Eicher Motor = 1999 (1) TMI 34 - SUPREME COURT, Punjab & Haryana High Court in case Adftert Technologies = 2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT.

There is difference in interpretation when the credit is on supply of goods or services or both and credit being in nature of transitional credit as that of Siddharth Enterprises = 2019 (9) TMI 319 - GUJARAT HIGH COURT and dftert Technologies = 2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT, credit due to change in provisions as that of Dai Intchi Kankaria = 1999 (8) TMI 920 - SUPREME COURT, Eicher Motor = 1999 (1) TMI 34 - SUPREME COURT dealing with lapse of credit. All this has been explained in the decision of Bombay High Court in case of Nelco Ltd = 2020 (3) TMI 1087 - BOMBAY HIGH COURT.

By: Rachit Agarwal
Dated: 04/05/2020

Respected Sh.Rachit Agarwal ji,

Further to my reply dated 2.5.2020, I submit my reply as under;

Legal interpretation of S.16(4) & 16(2):

1. You will agree that S.16(2) GST Act, superseded S.16(4) due to due to notwithstanding clause in S.16(2)..

2. No more conditions can be put under GST Act except 4 conditions put in by S.16(2) for availment of ITC.

3. After furnishing belated return, by paying Late Fee u/s 47 read with S.39, the right of the assessee for ITC accrued since his date of purchase bill, as per S.16(2), which can not be allowed to be lapsed under S.16(4) due to notwithstanding clause in S.16(2).

Judicial analysis:

1. The two cases quoted by you have already been discussed in detain earlier.

2. The Bombay High Court in case of JCB Limited = 2018 (4) TMI 585 - BOMBAY HIGH COURT quoted by you now, is under judicial consideration in the Supreme court for Constitutional Validity of S.140(3)(iv), CGST Act, 2017: (2019) 31 J.K.Jain’s GST & VR 327, wherein the last date of hearing was 25.2.2020. The Govt. went in the Supreme court due to difference of opinion between the High Court of Bombay & Gujarat High Court which rendered judgment in favour of the party in Filco Trade Centre Pvt. Ltd. v. Union of India (2018) 30 J.K.Jain’s GST & VR 264 (Guj) = 2018 (9) TMI 885 - GUJARAT HIGH COURT.

And as per Ratio decidendi of Supreme court in the case of UOI v. West Coast Paper Mills (2004) 164 ELT 375 (SC) = 2004 (2) TMI 344 - SUPREME COURT, when notices have been issued by admitting the SLP, then the judgment of the High Court is in jeopardy and the subject matter can not be said to have attained finality till decision of the Supreme court.

Therefore the judgment rendered on 20.3.2020, by the Bombay High Court in the case of Nelco Limited v. Union of India (Bom) (2020) 333 J.K.Jain’s GST & VR 257 = 2020 (3) TMI 1087 - BOMBAY HIGH COURT can not be made applicable till decision of the Supreme court.

3. Here it is worth mentioning that Bombay High Court delivered the judgment on 20.3.2020, much after the rejection of SLP on 28.2.2020 by the Supreme court: UNION OF INDIA & ORS. v. ADFERT TECHNOLOGIES PVT. LTD. (2020) 32 J.K.Jain’s GST & VR 147 (SC) = 2020 (3) TMI 188 - SC ORDER, which was filed by the Govt. Even then, its reference was missing in the judgment of Bombay High Court.

4. Moreover, by carrying out retrospective amendment in S.140, the Govt. has already regularized the defect in rule, 117, on Transitional Credit.

5. There is no difference of opinion in various cases, on ITC as a property right u/Article 300, Constitution of India, which can not be allowed to be lapsed.

CA Om Prakash Jain, Jaipur Tel 9414300730. E-mail: opjain02@yahoo.co.in

By: OmPrakash jain
Dated: 05/05/2020

 

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