REVERSAL OF ITC UNDER SEC-16(2)-SECOND PROVISO VS. CIRCULAR-92/2019

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..... REVERSAL OF ITC UNDER SEC-16(2)-SECOND PROVISO VS. CIRCULAR-92/2019
Query (Issue) Started By: - Pramod Panda Dated:- 19-6-2019 Last Reply Date:- 25-5-2020 Goods and Services Tax - GST
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GST
The recipient based on the Discounts/Financial Credit Notes received as at 31.03.2018 in respect of supply received for the Financial years 2017-18 reversed the ITC and paid output tax ac .....

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..... cordingly in accordance with Second Proviso to Section-16(2). In respect of some invoices for 2017-18, though the 180 days period is not over, but based on self-repudiation of liability by the Supplier by issue of the Post-Supply Credit Notes, the recipient in accordance with Second Proviso to Sec-16(2) reversed the ITC while finalising accounts for 2017-18. The reversal of ITC is correct as per t .....

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..... he law. This view of the recipient finds support in the case of 2019 (3) TMI 928 - AUTHORITY FOR ADVANCE RULING, TAMILNADU IN RE: M/S. MRF LIMITED Order No. 5/AAR/2019 Dated: - 22 January 2019. Subsequently, CBIC issued a clarificatory circular bearing No-92/2019, Dt:07th. March,2019 clarifying that the Secondary Discounts/Post-Supply Discounts which are not in accordance with Sec-15(3)/Financial .....

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..... Credit Notes will not reduce the ITC availability with the recipient and Output Liability of the Supplier, since such discounts are not in compliance with Sec-34 read with Sec-15. The clarificatory Circulars are always issued by CBIC based on representations received from stakeholders. The CBIC while issuing the aforesaid Circular has not discussed or referred to the provision contained in the Se .....

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..... cond Proviso to Sec-16(2) which is binding on recipients. Can a Clarificatory Circular issued by CBIC will override the provision of law as contained in Sec-16(2) ? In the instant case of the recipient, the reversal of ITC is in accordance with the provision of law. Kindly provide your EXPERT views. Reply By YAGAY andSUN: The Reply: The Law is simple on Credit Notes. If it is commercial credit .....

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..... note, then, no need to reverse the ITC, and if it is GST Credit Note, then, ITC is required to be reversed, however reversal of ITC is revenue neutral exercise.
Discussion Forum - Knowledge Sharing .....

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