ITC calim of fy 2017-18 and fy 2018-19, Goods and Services Tax - GST

[Madhavan iyengar]

A Company has accounted for ITC in the books of accounts in FY 2017-18 and FY 2018-19 based on invoices received and also goods / services have been received in the respecting accounting years ie FY 201718 and FY 2018-19

However in GSTR 3B the same has not been availed ie in returns

Query can the Company now in July 20 avail the ITC ( of FY 2017-18 and FY 2018-19) as mentioned above in GSTR 3B returns to be filed for July 20.

Experts please clarify

Posts / Replies

[Rajagopalan Ranganathan]

Sir,

The time limit for taking ITC for 2017-18 is GSTR-3B return filed for the month of September 2018, that is 20.10.2018. For the year 2018-19 the time limit is GSTR-3B return file for the month of September 2019, that is 20.10.2019. After this date it is not possible to take ITC for past period.

[Mahir S]

ITC for the past 2 financial years cannot be availed as on today, as rightly discussed above.

[Madhavan iyengar]

Then there is no equity in law as i have recd material, have invoice, and made payment and have used the material to produce finished goods / services which are sold and then output tax is discharged on the said finished goods/ services.

why then ITC should be denied

[DR.MARIAPPAN GOVINDARAJAN]

There is a failure on your part. I endorsed the views of the experts.

[KASTURI SETHI]

Sh. Madhavan Iyengar Ji,

The time limit fixed under Section 16(4) of CGST Act for availment of ITC has to be adhered to. Has it no statutory value ? Why do you not recognize the time frame ?

[Madhavan iyengar]

Kasturi sir

Accepted 100% legal provisions will hold ground as the provisions have been enshrined in the CGST Act

but dont you feel the law is tilted against the assessee and in earlier law in daiichi case where the apex court has held that ITC is a indefeasible and a vested right.

[Mahir S]

Even under CEx law, the time limit for availment of cenvat credit was fixed as 1 year from the date of relevant document.

If you keep on availing ITC after 3 years period, how would the CA auditors n Dept Audit officer verify if u had not availed it earlier. For your one document, they cannot recheck the previous year documents, to confirm that u had not availed it previously.

Time period for availment of ITC is a settled law.

[Mahir S]

However, you may request and refer the matter to GST Council for such extension of time.

But ultimately, it would create burden on Govt revenue.

[Ganeshan Kalyani]

Sir, the taxpayer has to maintain purchase register, input credit account in his books of accounts. Before, filing of GSTR-3B one has to reconcile ledgers and determine correct input tax credit. On a monthly basis or on quarterly basis as per the periodicity of return one has to carry out the reconciliation. The time limit given is sufficient to reconcile. Say, if a taxpayer has forgot to claim credit of Apr 2019 invoice then he has time to take the credit till Sept 2020. So, he has 17 months to take credit. If invoice pertaining to March 2020 is left to be taken then he has 6 months time. Ideally this much time limit is enough for a taxpayer to claim the unclaimed credit.

[Ganeshan Kalyani]

Sir, the time limit also serves the purpose of building discipline in the taxpayer to claim the credit on a timely basis.

[Mahir S]

Very well explained, Ganeshan ji..

[Spudarjunan S]

Dear Sir,

As rightly explained by the experts above, strict reading of the provisions of the law you may not be eligible to avail the ITC of 17-18, 18-19 as on today.

However, that doesn't stop you from litigating the same with Judiciary, where already two cases are pending in this regard in Gujarat HC - Niyati Constructuions SCA 5268 of 2020 & Madhya Pradesh HC - Shreeji Earth Movers WP 5434-2020.

You can litigate stating that the time limit u/s 16(4) relates with return u/s 39 and 3B is not a return u/s 39. Refer the rationales in the judgement of Hon'ble High Court of Gujarat in the case of AAP and co and also an interim relief order passed by Hon'ble High Court of Andhra Pradesh in the case of Panduranga Stone Crushers.

You can challenge the retrospective amendment made vide notification no.49/2019 in Rule 61(5) as it is affecting your substantiating rights and alos there are several grounds for challenge - 

You need to rationally decide whether it is worth to litigate or to be conservative. Moreover, the facts and circumstances of the assessee would also be a major factor to be considered for opting to litigation.

[Madhavan iyengar]

thanks experts for very good analysis and providing an insight into this issue. from the replies received from all experts we can conclude that any itc left to be claimed within statutory period will lapse.

[KASTURI SETHI]

Dear Madhavan iyengar Ji,

Q. Accepted 100% legal provisions will hold ground as the provisions have been enshrined in the CGST Act but don't you feel the law is tilted against the assessee and in earlier law in daiichi case where the apex court has held that ITC is a indefeasible and a vested right.

Reply : ITC/CENVAT/MODVAT is a facility. CGST law is not tilted against the assessee. Time limit is an absolutely must to monitor ITC availment. Without the bar of time limit, it is not possible to curb the misuse of the ITC facility. During my posting in Audit, I had detected such cases wherein the party had availed credit twice on the same invoice after two or three years. There is a reason behind the time bar limit for taking credit.At that time there was no restriction of time limit. MODVAT (earlier it was called modvat, thereafter, CENVAT and now ITC) was first introduced in the year 1986. From 1986 to June, 2020, a large number of fraudulently availed cases have been detected by the department. Modvat/Cenvat/ITC schemes are successful only in those countries where people avail credit honestly. Not going to the past, even after implementation of GST (within years) the department has detected unaccountable fraud cases of ITC. ITC was taken on the strength of invoices where firm does not exist. This is on record of the department.

2. If there is no time bar restriction on availment of ITC, there will be chaos. Most of the assessees do not object to time-bar restriction. What is objectionable is "ITC BLOCKED" Section 17 (5). When Govt. has made the law, "Credit must be used in the course of business or furtherance of business why credit should be blocked on one ground or other. Why to create Section 17(5) ? Time bar restriction is not injustice but blockage of ITC is injustice. Tax payers pay tax on their inputs, input services and capital goods but they cannot take credit because of various restrictions imposed under Section 17(5). Such ban should be lifted. Govt. should create some other source of income instead of blocking the ITC.

3. This Section of blockage of credit will generate litigation. Wait for the internal audit and CAG Audit. Tax payers are committing Himalyan blunders regarding availment of ITC and in other fields also.

4. Instead of blockage of credit , Govt. should fix ratio between payment tax by cash and through ITC. Earlier it was known as PLA : Cenvat ratio. Value addition portion should come from Electronic Cash Ledger. Fixing of ratio is better than blockage of ITC.

[Bhavika Chothani]

For 2017-18 the last date to take ITC was filing date of GSTR-3B of March 2019. For 2018-19 the last date was filing date of GSTR-3B of September 2019.

Since both the dates are elapsed now, so you cannot take the ITC for 2017-18 and 2018-19 now

[Mahir S]

Transitional credit, or CENVAT credit, refers to the use of tax credit accumulated up to June 30, 2017, the last day of the erstwhile Central excise and service tax regime.

“In the event, if the Commissioner, Commercial Tax, makes a reference to the GST Council, it is expected that the Council also, in turn, takes an early decision on the reference made by the Commissioner preferably within a period of 90 days from the date of receipt of reference by the Commissioner,” a single judge bench said in its ruling.

Under the GST law, Section 117(1)A, the GST Council has been empowered to extend the date for submission of the declaration electronically in Form GST TRAN-1 for those persons who could not submit it by the due date on account of technical difficulties on the portal.

In a petition , petitioner Dhamtari Krishi Kendra said he tried to file claim for CENVAT credit before due date of December 27, 2017, but could not do so because of technical glitches. Immediately, he reported the matter to the tax department. He subsequently submitted the return manually in January, 2018 and also sent a copy through post. Both were not accepted by the department which made him approach the high court. The court subsequently asked him to approach the Nodal Officer. He, however he was denied permission to submit the claim. So, he went back to the court.

The court took note of elements which Tax Commissioner overlooked. These include proofs supporting the petitioner’s claim of not able to file the return due to technical glitch, the submission of complaint before due date and submission of the form manually and also through the post within three weeks from due date. “Accordingly, this court remits the matter back to the Commissioner, Commercial Tax, for a reconsideration and for passing of a fresh order,” the ruling said while adding he/she should keep all the documents submitted by the petitioner in the mind and decide within 60 days.

If required, the Commissioner can refer the matter to the GST Council, the court said.

Divakar Vijayasarathy, Founder and Managing Partner of DVS Advisors LLP, said the decision highlights the apathy in the system which refuses to be tax-payer friendly. “As much as we need to respect law, circumstances like these need to be viewed from the spirit rather than the letter alone. Further inability to comply with for reasons beyond the control of the tax payer should always be viewed from a benign perspective.

“With a legal system which is saddled with a huge backlog and an archaic executive framework, the country needs significant reforms to get anywhere close to our ambition of being business friendly,” he said.

[Mahir S]

At serial no 08 above, I had also expressed my opinion of referring such issue to the GST Council, which the Hon. High Court has now directed in a related matter.

[Raman Singla]

Continuing with the same topic with different picture... F Y 2017-18 AlI GSTR-3B FILED AS PER BOOKS WHICH ARE SAME AS PER GSTR-2A... BUT DUE TO SOME TECHNICAL PROBLEM ITC OF ONE INVOICE IS NOT TAKEN WHILE FILING GSTR-9 F Y 2017-18 and put in the cell "ITC to be lapsed ".... WILL AUTHORITY ALLOWED FULL ITC FOR THE YEAR OR LAPSE THAT ITC PART...