input credit, Goods and Services Tax - GST

[mathur ramachandran]

Assessee running a kalyana Mandapam – Paints Purchased for painting mandapam – whether eligible for input credit?– IF YES, please clarify the following:

the purchases were made in Feb 22 – reflected in GSTR-1 filed by the supplier in Mar 22 – Input not claimed at all as payments were not made before 30.9.22 – Now payments have been made in instalments after 30.9.22-Can input tax be claimed pro-rata based on payments made after 30.9.22 in gstr3B for QE 31.12.22 – let me have your valuable opinion on this point

Thanking you

Ca M S Ramachandran, 9447776812

Posts / Replies

[PRIYACHARAN SR]

It is imperative to note that ITC on WC services is blocked on ‘construction’ of immovable property (other than Plant & machinery/ further supply of WC). ITC for routine repairs/maintenance is not blocked.

Essentially, ITC is blocked if expenses are capitalised in books of account (allowed on revenue exps.) as per section 17(5) which is as follows

"goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.

Explanation.––For the purposes of clauses (c) and (d), the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property"

So if you are capitalising such paint expenditure then it is not allowed, however if such expenses are charged to revenue ITC is allowed.

Further , there is time limit avail ITC i.e till for FY 21-22 is Nov 30th or date of filing annual return whichever is earlier as per section 16 (4).

However there is no time limit to reavail ITC, if you have originally reversed such ITC owing to non payment of creditor dues within 180 days. In your case , ideally you were supposed to avail and reverse the ITC in the month to which such invoice belongs to. Now upon payment you could have re-availed the ITC.

Since originally you have omitted to avail and reverse ITC earlier, now department may challenge your claim on grounds of expiry of time mentioned under section 16(4), since payments belongs to FY 21-22 and your original claim of ITC is after due date to avail ITC.

Disclaimer: "My Opinion. Not to construed as professional advice"

[Amit Agrawal]

Comprehensive reply by Shri Priyacharan Sr Ji!

One more aspect to be considered is the fact that assesses is filing quarterly return for Oct, 22 to Dec, 22 and time-limit to avail ITC u/s 16 (4) (pertaining to previous year) is 30.11.2022 or furnishing of the annual return for FY 21-22, whichever is earlier.

However, this issue is not free from doubt as Dept. is linking date of availing ITC to date of filing return where ITC is so disclosed.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Padmanathan Kollengode]

Dear MSR sir,

Regarding the first query, I am of the view that ITC is eligible for paints purchased for painting kalyana mandapam as it is a revenue expenditure and not capitalised in the books of accounts.

Regarding the second point, ideally input tax credit must have been taken in GSTR-3B of March 2022 when conditions for availing ITC has been satisfied. Subsequently, when 180 days elapses, the ITC earlier availed must have been paid along with interest as per Rule 37. Subsequently, when ever the payment is made to the supplier, re-credit of ITC can be availed without any time limit.

Here, the issue is that credit has not been originally availed within the time limit under section 16(4). Therefore, in my humble opinion the claim of ITC is time barred.

[KASTURI SETHI]

Well explained by Sh. Padmanathan Kollengode Ji. I agree with him in toto.