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ITC on debit notes, Goods and Services Tax - GST

Issue Id: - 117134
Dated: 3-4-2021
By:- Amresh kumar
ITC on debit notes

  • Contents

Dear sir,

One of my service provider was providing professional / consultancy service.

Now it has come to notice that he had crossed the limit of ₹ 30 Lakhs in 2018-19 but failed to get himself registered as the limit crossed was only by fifty thousand Rs.

Now while filing the Income tax return for 2019-20 ( filed late due to covid) it is noticed that he HSS crossed the limit of ₹ 20 lakhs.

Department has still not noticed it.

Noe hr HSS got himself registered under GST.

He is discharging the GST liability from 2018-19 onwards and raising Debit Notes for GST paid for each financial year w.e.f. 2018-19 onwards.

Can I claim ITC on Debit Notes raised for GST payment for year 2018-19 onwards as he is raising Debit Notes in current month I.e. April 2021


Amresh Kumar

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Showing Replies 1 to 13 of 13 Records

1 Dated: 3-4-2021

Sh.Amresh Kumar Ji,

First of all you should talk of payment of interest on account of late deposit of GST, penalty for not obtaining registration in time and also penalty for non-filing of various returns for the past period. See Section 122 of CGST Act for penalty on account of various offences. In order to prove your bona fides, you must meet jurisdictional GST Range Officer and inform him about all facts.

Although your offences have not come to the notice of the department and you have obtained registration on your own and deposited tax on your own even for the period involved prior to registration, it does not mean you will go scot-free. GST laws do not permit such exoneration.

2 Dated: 4-4-2021

In continuation of my reply dated 3.4.2020, regarding admissibility of ITC in this scenario, ITC is hit by Section 18 of CGST Act, 2017. The restriction of time limtation is there.

3 Dated: 4-4-2021
By:- Amresh kumar

Dear Kasturi Sir,

Thanks for your kind reply.

The party is ready and paying all the interest and penalty as required under the Law. There is no intention to avoid any Govt Dues.

Can the ITC be availed on the basis of Debit Notes for GST payment for the year 2019-20 and 2020-21 since the Debit Notes has been De-linked from the Invoices.


Amresh Kumar

4 Dated: 4-4-2021

Dear Amresh Kumar Ji,

In this scenario, Section 18(2) of CGST Act is applicable and this Section exists as it was prior to the amendment in Section 16 (4) which de-links debit note from the invoice. which is as follows:-

SECTION 18. Availability of credit in special circumstances

(2) A registered person shall not be entitled to take input tax credit under sub-section (1) in respect of any supply of goods or services or both to him after the expiry of one year from the date of issue of tax invoice relating to such supply.

In this scenario, the basis of your availment ITC is invoices pertaining to the past period involving more than one year and NOT debit notes. (Though apparently these are debit notes) This is a factual position. In this case, debit note is fully integrated to invoices. Such credit is under special circumstances. The word, 'debit note' is not here on the basis of which you want to take credit. Do you find the word,' debit note' in Section 18 (2) above ?

ITC on the strength of invoices falling within one year from the date of issue is allowed.

When you are covered by Section 18(2) of CGST Act, why do you talk of amended Section 16(4) ?

Debit notes are always integrated to invoices and those invoices may pertain to more than one year old. In that scenario, ITC may be allowed. Definition of 'debit note' includes supplementary invoice' also. In your case, the date of registration is very crucial inasmuch as invoices pertain to the period prior to the date of registration.

5 Dated: 4-4-2021

Dear Amresh Sir,

Debit note can only be issued after the issuance of a tax invoice. In your case, you have not issued any tax invoice and you just can’t issue debit note (in GST) like that.

You need to pay tax along with the interest. Thereafter, pay the relevant penalties applicable to your case.

ITC is applicable, the reason being, anyway interest and penalty is paid and the registered person had discharged its share of punishment for non-compliance.

Limitation under section 18 is for “inputs held in stocks and inputs contained in semi-finished and finished …....” Your case is different

Your case will fall under section 16(4), ITC is w.r.t to invoice not from the date of supply. You might take ITC with the caveat that it will be contentious in future.

6 Dated: 4-4-2021

Sh.Amresh Kumar Ji,

I re-examined the whole issue. I agree with Sh.Abhishek Tripathi, Sir.

7 Dated: 5-4-2021
By:- Shilpi Jain

In this case your supplier has already issued the invoice in the earlier year. This was not a tax invoice. The tax for this is being paid now.

The GST invoice in this regard can be issued by the supplier now (i.e. with today's date) and disclose in the returns which can be taken as a credit by you.

While filing the GSTR-9/the reco statement there would be excess turnover disclosed in this year in the returns and the reason would be that the past years liability has been paid now.

Further, the supplier's assessment cannot be questioned in the hands of the recipient. Hence, the supplier issuing invoice now could be questioned in the hands of the supplier (which will have to be defended) and the credit in the hands of the recipient cannot be questioned.

8 Dated: 5-4-2021

Strings are attached to the availment of ITC for the past period. The sword of time limitation is hanging over. Such credit will be prone to litigation. However, the issue is worth fighting. There is a ray of hope of getting relief (justice) through prolonged litigation only.

9 Dated: 5-4-2021
By:- GB Rao

Dear querist,

I agree with the explanations given by the experts. However, availing ITC for the past period definitely pose problem to you. When a genuinely registered person not able to take ITC at present for the period pertaining to 2018-19 due to limitation of time in terms of Section 16(4) of CGST Act, 2017, how can you expect the same in your case inspite of paying interest, penalty etc. for your wrong doing? You have to fight in Courts for any solace in this issue, I think.

10 Dated: 5-4-2021

Dear GB Rao Sir,

You have a very valid question.

I think the ITC clock starts from the date of issuance of an invoice. If the person back in FY 17-18, issue an invoice and forgot to take ITC then that is his problem, he just cannot sleep over his rights. And if some other person issue the invoice today and he also sleeps over till the period prescribed under 16(4), then that other person will also not get the credit. This interpretation doesn't create any inequality because the ITC clocks starts from the date of issuance of an invoice.

11 Dated: 6-4-2021

Sh.Abhishek Tripathi Ji,

Sir, I am all praise your 'reaction' (nay response) at serial no.10 . I am emphasizing positively. I am always keen to read Sh.G.B.Rao's views.

Further I want to add here that the word, 'hibernation' is most appropriate. It is in the fitness of things.

12 Dated: 6-4-2021
By:- Amresh kumar

Dear all,

Thanks for valuable feed back.

I agree that GSTTax invoice was not issued previously but a Bill was raised since no GSTN was there and payment received after TDS.

Now GST registration has taken place.

If the GST Tax invoice is issued now for the service provided during the period 2018-19 on wards and also all the interest and penalty including penalty for not taking Registration is paid, the ITC can be availed.

I agree with all experts that it will involve a legal issue with department but there is no mens era involved.

At least for the F.Y. 20-21 onwards ITC cannot be denied. Since Annual return is pending.

Regards to all

13 Dated: 6-4-2021

Sh.Amresh Kumar Ji,

I am not doubting your integration. Your intention may be clear but I am talking of whatever is on records of the department. You have committed a record based mistake. On the basis of records, the element of mens rea is very much present inasmuch as non-obtaining of registration well in time is itself a documentary proof of the presence of the mala fide intention. As per Section 17(5)(i) of CGST Act, if any tax is paid in accordance with the provisions of Section 74, 129 and 130 of CGST Act, ITC is not allowed. Your major problem is for the past period i.e. prior to the issuance of registration.


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