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

[Ganeshan Kalyani]

For FY 18-19, the time limit to claim credit was 20.10.2019 i.e. the due date of filing of GSTR 3B for the month of Sept 19.

[KASTURI SETHI]

There is a violation of Section 16(4) CGST Act. The department's notice/letter is legally correct.

[GB Rao]

Dear sir,

I agree with the views of experts. There is a violation of provisions of Section 16(4) of CGST Act, 2017 in your case. The last date for availing input tax credit relating to invoices issued during the financial year 2018-19, is the last date of filing of September 2019 GSTR-3B return i.e., 20/10/2019. Hence, you are supposed to avail input tax credit by 20/10/2019. In your case, you have filed the returns after 21.10.2019 which tantamount to availing input tax credit after 21.10.2019 and hence it is a violation of provisions of Section 16(4) of CGST Act, 2017.

[Alkesh Jani]

Shri

I agree with the views of our experts, but as per the decision of Gujarat High Court, GSTR-3B is not the return in terms of Section 39, therefore, the last date to avail credit is before the date of filing of Annual return. Pls refer Issue Id :- 115959.

However, the facts and circumstances may be taken into account and of course, legal process is to be followed.

Thanks

[KASTURI SETHI]

GSTR 3B is a return w.e.f. 1.7.17 (after amendment retrospectively).

[GB Rao]

Dear sir,

Notification No.49/2019 Central Tax Dt.9.10.2019 seeks retrospective amendment from 1st July, 2017- where the dealer furnishes return in Form GSTR-3B, he shall not be required to furnish return in Form GSTR-3.

In the said Notification

4. In the said rules, in rule 61,-

(a) for sub-rule (5), the following sub-rule shall be substituted, with effect from the 1st July, 2017 namely:-

“(5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 or in FORM GSTR-2 under section 38 has been extended, the return specified in sub-section (1) of section 39 shall, in such manner and subject to such conditions as the Commissioner may, by notification, specify, be furnished in FORM GSTR-3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner:

Provided that where a return in FORM GSTR-3B is required to be furnished by a person referred to in sub-rule (1) then such person shall not be required to furnish the return in FORM GSTR-3.”; (b) sub-rule (6) shall be omitted with effect from the 1st July, 2017.

Earlier, Hon'ble High Court in the case of AAP & Co., Vs.UOI = 2019 (7) TMI 401 - GUJARAT HIGH COURT held that the Form GSTR-3B is not a Return, rather a Return specified for Section 39 in Form GSTR-3.

In view of this, the stand of the Department in issuing notices for violation of provisions of Section 16(4) of CGST Act, 2017 is correct in my view.

[Alkesh Jani]

Shri

The one of the ground as discussed by the Hon'ble High Court is required to be taken into account

"It was notified vide Notification No.44/2018 Central Tax dated 10th September 2018 that the due date of filing the return under Section 39 of the Act, for the months of July 2017 to March 2019 shall be subsequently notified in the Official Gazette."

Moreover, Notification No.04/2020-CT dated 10.01.2020 is also vital before arriving to any conclusion.

Thanks

[Gaurav Poddar]

Dear all;

In the above case can the credit be disallowed only on the grounds that return is filled after 20.10.19.

if yes can any body suggest a way out to avail the credit.

[ramm jainn]

please suggest any way to come out. Is juridiction having any power to help?

If not then this is injustice and harrassment? Late filing with penalty is not a crime?

[KASTURI SETHI]

I agree with you that tax payers must not suffer loss of ITC which is their substantive right. GST Laws and Common Portal System both are at its infancy stage. It takes years to stabilize. Govt. has made unlimited amendments in GST Acts since its implementation. It is a common cause. So you make a humble request to the GST Council to solve your problem. You may make a representation of your grievances to the Chairperson, GST Council, New Delhi through Trade and Industry Association. Pl. ensure that language should be polite

[ramm jainn]

My total itc was 16 lakhs as per 18% and turnover was only 70 lakh. My crime was I filed return on 1 november 2019.

Government should extend the date else I have no option but to shut down business. This is not the right way to generate revenue.

[KASTURI SETHI]

I realize your Grievances. I am of the view that you must make all-out efforts. You will be successful. Raise your voice so that it should reach GST Council. If you cannot approach Trade and Industry Association, write a simple letter and email to the Chairperson GST Council.

[GB Rao]

Dear sir,

As rightly advised, you may approach trade association as well as representing CBIC in this matter. There may be many Tax payers facing the similar situation. You better coordinate with your fellow trade who are facing the same problem and fight collectively by filing writ petition with Hon'ble High Court for redressal of your genuine problem.

[KASTURI SETHI]

The phrase,"whichever is earlier" mentioned under Section 16(4) of CGST Act has opened Pandora 's box. Laws are framed for welfare of the public and not for snatching fundamental rights. Making representation to Board and GST Council is easier and free of cost and it will yield result faster than Court.

[ramm jainn]

Dear sir,

As advised, can we directly approch high court without appealing to gst department??

As also suggested I have written e maii to [email protected] and cbicmitra.

Gstcouncil replied to contact juridiction but juridiction has not given appropriate answer.

The question is how can we leave our own itc and If claimed, later pay the same with interest of section 16(4) and interest of section 36(4). Both interest areinterest are applicable as per juridiction office.

[KASTURI SETHI]

Show Cause Notice can be challenged direct in High Court.

[ramm jainn]

Dear sir,

I saw a CA lecture on youtube where they stated that many tax firm has given a presentation to cbic and council but govt has not taken any decision.Thats one point.

second is, How we can directly approch cbic and council for our presentation and our case discussion?

[Alkesh Jani]

Dear all,

First of all, to my reply dated 04.02.2020, I said that I agree with the views of experts, but when we are having any case law on hand one should give a chance.

Now, as the appellant i.e. M/s. AAP & Co. = 2019 (7) TMI 401 - GUJARAT HIGH COURT filed a writ against the press release, then a person who is really affected should go for it. As in the case, the Rule 61(5), as pointed out by our expert, was also part of the writ. Para 12 of the writ application it was submitted that GSTR-3B was in lieu of GSTR-3, but later on it was omitted and hence GSTR-3B is not in lieu of GSTR-3.

At Para 15 of the writ it was submitted that the decision to add return in form GSTR-3B was taken in the 18th GST Council held on 30th June 2017 on account of the reason stated as 'shorter return for first two months of roll out'. It has not been introduced as a return in substitute of return to be filed in form GSTR-3. Therefore, it is quite obvious that return in form GSTR-3B is only a temporary stop gap arrangement till due date of filing return in form GSTR-3 is notified in the GSTN portal. It is therefore, submitted that it is quite obvious that the return to be filed in form GSTR-3 is the final return for taking additional input tax credit as well as discharging of additional tax liabilities after filing of return in form GSTR-3B. It is, therefore, submitted that the last date for availing the input tax credit relating to the invoices issued during the period from July 2017 to March 2018 is the last date for filing of the return in form GSTR-3 and not GSTR-3B.

At Para 26, the issue faced by the taxpayer was raised. The Para 30 of the said decision of High is vital and is reproduced below:-

“30. It would be apposite to state that initially it was decided to have three returns in a month, i.e. return for outward supplies i.e. GSTR-1 in terms of Section 37, return for inward supplies in terms of Section 38, i.e. GSTR-2 and a combined return in Form GSTR-3. However, considering technical glitches in the GSTN portal as well as difficulty faced by the tax payers it was decided to keep filing of GSTR-2 and GSTR-3 in abeyance. Therefore, in order to ease the burden of the taxpayer for some time, it was decided in the 18th GST Council meeting to allow filing of a shorter return in Form GSTR-3B for initial period. It was not introduced as a return in lieu of return required to be filed in Form GSTR-3. The return in Form GSTR-3B is only a temporary stop gap arrangement till due date of filing the return in Form GSTR-3 is notified. Notifications are being issued from time to time extending the due date of filing of the return in Form GST-3, i.e. return required to be filed under Section 39 of the CGST Act/GGST Act. It was notified vide Notification No.44/2018 Central Tax dated 10th September 2018 that the due date of filing the return under Section 39 of the Act, for the months of July 2017 to March 2019 shall be subsequently notified in the Official Gazette.”

Of course, the interpretation given by the Hon’ble High Court do matters a lot. Therefore, I am of the view that to file writ for the problem faced is your right and it is court to decide.

Thanks

[KASTURI SETHI]

I agree with Sh.Alkesh Jani Ji. I feel the department is weak on merits. Non-implementation of GST-3 return and confusion about the legal status of GST 3 B would tilt the issue in favour of assessees. The querist must file writ petition with High Court without any delay. Through Association is the best option.

[ramm jainn]

If it is your itc you have to leave it and if you have claimed excess itc then you have to reverse it with interest.

govt has extended almost all due dates in gst but not to take itc for year 2018-19. government using itc of traders as source of revenue machine which is not at all in the rights of public interest.

Atleast juridiction should have power to decide the difference between fraud and mistake.

[Tarun jain]

sir as per rules 18(2) of cgst act said that itc can be takent from one year

[KASTURI SETHI]

That is under special circumstances. Actually the assessee gets period less than one year. Read again and also compute the time period for availing ITC.

[Tarun jain]

Sir we have also received notice last date is 10.02.2020 sir ab kya karna chahiye my contact no 7737320209 [email protected]

[KASTURI SETHI]

Get the extended for 15 days. Do not worry. Heavens will not fall ! You want qualitative reply (full of legal force) and it will consume time. In the meantime you can engage an Advocate or Consultant. Write a simple email for extension on the ground that you need the services of an expert for filing reply to the notice. Pl.ensue letter/email must be polite and humble. I am sure you will get extension. It is a practice that you may not receive any reply but your email or letter will be on record.It is deemed to be granted.

[ramm jainn]

Join twitter and raise your voice with all practitioner. People are required to move towards court. There has been rucus around practitioners regarding 16(4).