RELATING TO ITC VIOLATION SEC 16(4) OF CGST ACT 2017, Goods and Services Tax - GST

[kirankumar bonthalakoti]

My client recieved a notice that you have availed ITC in January 2019, February 2019 and March 2019 in GSTR 3B Returns for FY 2018-19 after 21-10-2019 which is violation of provisions of Section 16(4) of CGST Act 2017.

Actually my client has taken ITC of respective months only and not taken any ITC of F Y 2017-18 but filed after 21-10-2019 with late fees.

kindly guide me if there is any violation of provisions of Section 16(4) of CGST Act 2017.

Posts / Replies

[Alkesh Jani]

Shri

In your case, the grounds mentioned is to be seen, moreover, what are the facts and how figures are posted and what are the transaction made is also to be observed. Therefore, it is wise to bring out show cause notice and also relevant details of your transaction and return filed. Based on above, our experts can give you proper reply.

Thanks

[Tarun jain]

What is treatment of itc on capital goods can we claim whole itc or 5 percent per quater can remidy available for itc on capital goods claimed after 16(4)

[KASTURI SETHI]

Section 16(4) of CGST Act : 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 :

SECTION 39. Furnishing of returns. - [(1) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, a return, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars, in such form and manner, and within such time, as may be prescribed;

A combined reading of both reveals that Section 16(4) talks of due date of furnishing return under Section 39 and Section 39 (1) talks of a return every month. It is monthly return GSTR 3B which is the basis of notice and not annual return. Annual return is under Section 44 and still no provision in Common Portal for 18-19 has been made so for . Due date of furnishing annual return for 18-19 cannot be the basis of notice issued for the year 18-19. GSTR 3 return has been omitted and return GSTR 3B which was converted into return from statement retrospectively w.e.f. 1.7.17 is the basis.

So retrospective amendment should be challenged by those who have been issued notices for denial of ITC under Section 16(4) of CGST Act, it being time barred.

As per dictionary meaning of word 'A' is 'ANY' . 'a return' means any return under Section 39 and not under Section 37 and Section 38 . GSTR 3 B is only monthly GSTR 2 & 3 both are not in picture. GSTR-1 is monthly as well as quarterly.

[KASTURI SETHI]

Dear Bayyareddy DK, As per the present position of GST law i. e. SECTION 16(4) of CGST Act, the department is legally very very strong. So only quick-fix way-out is "By Please " to Finance Minister and GST Council. It is cost free and tension free. Other route of High Court/Supreme Court is very costly and time consuming. Do not waste your time, money and energy in preparation of draft to Courts. Make humble representation to Finance Minister through Association as already advised above. You may get justice in Court that will be very very late and meanwhile will pressurise to reverse with interest. Rest is your option.

[Kashish Gupta]

The experts committee has also initiated debate on ambiguity in section 16(4) - whether it means credit to be availed in credit ledger on portal or in books of account.

Further, it is settled principle that current law shall govern the current activities and no benefit can be taken by way of retrospective amendment in law. Since as on 21.10.2019, the air was clear that GSTR-3B is not a return and credit can be claimed till date of furnishing of annual return, in my view, it is a fit case of argue before appellate authorities. Client should not reverse the credit and shall submit a strong legal reply.

[SUSHILKUMAR GOYAL]

In view you should approach High Court for relief by filing writ petition on the ground of right to justice, which may override provisions of GST Law.

[KUNAL DESAI]

There is no such date to be followed. You may always play with books of accounts. Do you need to write anywhere in GSTR-3B that for which month you are claiming ITC?

I hope you understand the answer.

[KARISHMA CHAWLA]

One of my client has also received Notice. Any luck on requests to CBIC or GST Council?

[CA Venkataprasad]

Dear Sir,

Strictly speaking the time limit to avail ITC is expired by 20.10.2019 for FY 2018-19. However, there are various possible grounds which can help to fight against the denial of the legitimate right of ITC for mere delayed filing of the return. We have given the standard reply covering the this issue, which can be accessed at https://hiregange.com/assets/articles/b0d9c-reply-to-16-4-notice.pdf