Refund under Inverted duty structure - Issue with net ITC, Goods and Services Tax - GST

[Pushpa Raj]

Sir,

We are one of the manufacturer of pharmaceuticals goods in Pondicherry and we have claimed Refund under Inverted Duty structure for the month of Sep'2018.

Here i have purchased some material in the month of Aug'2017 and filed the return for GSTR-3B on the same month of Aug'2017 but the supplier failed to file return GSTR-1 on Aug'2017 instead they filed on Sep'2018. Now I have taken that ITC for my Sep ‘2018 refund claim (We have not taken that ITC for our previous refund claim due to non-filing for GST return by supplier) and shown in the RFD-01A net input tax credit column. But GST officer said that Aug'17 bill ITC is not eligible for Sep'18 refund Claim and need to be disallow from RFD-01A net ITC. if I said to officer , When supplier file the GSTR-1 , then only it will reflect on GSTR-2A and eligible for Refund claim but they are not accept and asking the notification for that .

Kindly suggest us for the above claim process.

Thanks and Regards,

P.Pushparaj,

Pondicherry .

Posts / Replies

[KASTURI SETHI]

You can avail ITC for August,17 in September, 18. There is no dispute or doubt or confusion. Relaxation has been given for the financial year 2017-18 (July, 17 to March,18). Amendment i.e. proviso to Section 16(4) of CGST Act has been inserted vide Removal of Difficulties Order No.02/18 dated 31.12.18. As per this Order of Govt., a supplier can upload the invoice pertaining to the year 17-18 up to March, 19. Hence you are eligible for this ITC and show copy of above order to the concerned GST Officer. Hope your problem will be solved.

[CSSANJAY MALHOTRA]

Please refer to cgst circular no 59/2018 dated 04/09/18 (para 2.3).

Also go through CGST circular 79/18 dated 31.12.18 ( extracts as attached below). Any of the process as stated in 2 circulars can be followed. Officers can’t reject.

Non-consideration of ITC of GST paid on invoices of earlier tax period availed in subsequent tax period:

10. Presently, ITC is reflected in the electronic credit ledger on the basis of the amount of the ITC availed on self declaration basis in FORM GSTR-3B for a particular tax period. It may happen that the goods purchased against a particular tax invoice issued in a particular month, say August 2017, may be declared in the FORM GSTR-3B filed for a subsequent month, say September 2017. This is inevitable in cases where the supplier raises an invoice, say in August, 2017, and the goods reach the recipient‟s premises in September, 2017. Since GST law mandates that ITC can be availed only after the goods are received, the recipient can only avail the ITC on such goods in the FORM GSTR-3B filed for the month of September, 2017. However, it has been observed that field officers are excluding such invoices from the calculation of refund of unutilized ITC filed for the month of September, 2017.

11. In this regard, it is clarified that "Net ITC‟ as defined in rule 89(4) of the CGST Rules means input tax credit availed on inputs and input services during the relevant period. Relevant period means the period for which the refund claim has been filed. Input tax credit can be said to have been „availed‟ when it is entered into the electronic credit ledger of the registered person. Under the current dispensation, this happens when the said taxable person files his/her monthly return in FORM GSTR-3B. Further, section 16(4) of the CGST Act stipulates that ITC may be claimed on or before the due date of filing of the return for the month of September following the financial year to which the invoice pertains or the date of filing of annual return, whichever is earlier. Therefore, the input tax credit of invoices issued in August, 2017, "availed‟ in September, 2017 cannot be excluded from the calculation of the refund amount for the month of September, 2017.