Sec 16(4) Reversal of ITC when 3B is filed belatedly, Goods and Services Tax - GST

[g srikanth]

As we are aware, the Gujarat High Court in AAP judgement has held that (a). Sec 16(4) refers to due date of filing return u/s 39; (b). The form to be filed u/s 39 is GSTR 3 as prescribed in Rule 61; and (c) in so far as GSTR 3 has not been enforced, even if one files the GSTR 3B beyond the due date of filing the return for Sept following the end of the financial year, the ITCs can be taken.

Subsequently, Rule 61 was amended to replace GSTR 3B for GSTR 3 w.e.f. 1/1/21.

My question is whether the GUJARAT HIGH COURT judgement holds the forte till rule 61 was amended. For eg., if Mar 20 return was filed in Nov 20, can we still quote the Gujarat high court judgement to utilise the ITC?

Posts / Replies

[Amit Agrawal]

The Hon’ble Supreme Court of India in UNION OF INDIA & ORS. VERSUS AAP AND COMPANY [2021 (12) TMI 840 - SUPREME COURT] reversed the judgment of the Hon’ble Gujarat High Court. 

[g srikanth]

Sir,

Thanks a lot for your feedback.

Regards

G. Srikanth

[Sadanand Bulbule]

Dear Sir

It may also be noted that, the restriction of time limitation to avail ITC under section 16(4) of the Act has been challenged before the Hon’ble Supreme Court in the Case of MRITYUNJAY KUMAR VERSUS THE UNION OF INDIA & ORS. - 2024 (1) TMI 288 - SC ORDER against the Hon’ble Patna High Court Order rendered in the case of GOBINDA CONSTRUCTION, MRITYUNJAY KUMAR VERSUS UNION OF INDIA, STATE OF BIHAR, PRINCIPAL CHIEF COMMISSIONER OF CGST AND CENTRAL EXCISE, PATNA, PRINCIPAL COMMISSIONER PATNA 1, CGST AND CENTRAL EXCISE, PATNA ADDL. COMMISSIONER OF STATE TAX (APPEAL) , PATNA, ASST. COMMISSIONER OF STATE TAX, PATNA - 2023 (9) TMI 902 - PATNA HIGH COURT

[KASTURI SETHI]

Sh.G.Srikanth Ji,

(i) Time restriction for availing Modvat  credit  had been in force since 1986, the year of introduction of  Modvat Credit Scheme. 

 (ii) You have referred to the amendment of Rule 61 w.e.f. 01.01.2021.  You are not talking of Section  16 (4)  of CGST Act.   A rule cannot override or be contrary to a Section held by Hon'ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, JAMSHEDPUR VERSUS ASHOK ARC - 2004 (12) TMI 94 - SUPREME COURT.  SC-3-member Bench. (issue different)

(iii)  Rules and Notification cannot override Act and cannot be derogatory to the object of  the Act----held by the Supreme Court in the case of UNION OF INDIA VERSUS JALYAN UDYOG - 1993 (9) TMI 108 - SUPREME COURT. (issue different).

                           

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir,  W.r.t. serial no.3 above, is it not hoping against hope ?  Your views please.

[Sadanand Bulbule]

Dear Sir ji

While vouching the history of time limitation explained by you, I am transmitting the raging feelings of business community this way:

As far as ITC landscape is concerned, Section 16[4] plays the role of "cat among the pigeons".Meaning, it is not protecting what is due in terms of Section 16[1] & [2], the engine of ITC.

End of the day, law is the law. It has to be respectfully complied by all Taxation discipline demands "Stop watch" for everything to maintain the dignity of its benefits. If there is no  "sense of time", then chaos is the rule. Civilized administration does not approve it.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir,  During my posting in Audit wing, I detected such cases where the assesseees  availed modvat credit/cenvat credit twice on the same invoice after a gap of one  or two  years. in some guise. Such misuse was detected through out India. This is a true incident.  That was not era of high technology. At that time  in the case of bulky Modvatable/Cenvatable  invoices, it was not feasible  to check each and every entry. Checks were exercised at random. So the time restriction was enforced to plug the leakage of revenue. . 

All is NOT  bad in India.  There is no dearth of honest assessees in India. 

I also feel the pulse of the Trade and Industry. Now the matter is sub  judice  with Hon'ble Supreme Court.  Let us  hope some way-out from the Apex Court so that genuine Registered Tax Payers should not suffer.

[Sadanand Bulbule]

Dear Sir ji

The machinery of GST regime is striving to build harmony and trust between the tax taxpayers and the tax administration in terms of transparency in thoughts, opinions, actions and compliance of the same with equal force from both sides. The overall adjudication approach should be guided by tangible evidence of breach of law and not on suspicion.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir,     Agreed but  challenging constitutional validity of Section 16(4) tant amounts to asking for moon. This is my hunch.

[Sadanand Bulbule]

Dear Sir ji

"Compliance first, ITC second". This is what the history of judicial rulings keep such system intact. It is natural for the losers of ITC to cry in public. But the present GST law does not & cannot remove their tears.  It is only they have to ensure that, they do not cry for "Moon". 

[Sadanand Bulbule]

Dear all

 My categorical opinion about Section 16 [4] is like this:

" If lightning strikes a rotten tree, it collapses. It's not the fault of the lightning".

 So it is advisable to have a healthy tree with the lightning conductor.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir,   What I wanted to say you have expressed in a very refined, polished, flowery and bombastic language.

 It  reminisces  me of the doctrine  and also  famous dialogue in Shakespeare's King Lear, "Nothing will come of nothing".

[Sadanand Bulbule]

Dear Sir ji

The subject is such that, it brews similar thoughts. That's the intricate beauty of Section 16[4] as of now.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir,   Which is most appropriate  phrase  'intricate beauty'  or  'intricate ugliness' or 'apparent ugliness' here  ? 

My opinion  is 'intricate ugliness' is the most appropriate  phrase to be used here.

Very keen to hear from you. Thanks & regards.

[Sadanand Bulbule]

Dear Sir ji

Rest apart the core subject, I appreciate your microscopic talent to touch the invisible bottom of each and every word in different dimensions. It's quite fascinating hobby.

Unless & until the Hon'ble Supreme Court invalidates Section 16[4], which is seldom possible, I feel it carries intricate beauty. Otherwise we are opposing what we have said in its favour so far, if the word " intricate ugliness" is used.

"Beauty is in the eye of the beholder".

Regards.

 

[Sadanand Bulbule]

Dear all

I always believe that, one should have tolerance for the opinions of others, because tolerance is the greatest virtue. Therefore it would be unfair to force one's views on others. It's the choice of the querist to accept or reject. In a way, it is the querists who are providing opportunities to express opinions. Otherwise there is no scope for exchange of healthy and innovative thoughts in such popular public forum for mutual enrichment of knowledge.

May the tribe of querists increase. [ I am also one of such tribe]

[KASTURI SETHI]

Sh. Sadanand Bulbule Ji,

Sir, I agree with you in toto. Here famous quotes in support of your views.

(i) Eugene Ionesco, a renowned playwright, wisely remarked, “It is not the answer that enlightens, but the question.”

(ii)  Questions are more important than answers.------------- Terry Heick Expert in education

[Ganeshan Kalyani]

Sir, ITC saves Cash outflow while paying GST. So, instead of Govt. the taxpayer should be keen to claim it as early as possible. Why to keep ITC on hold till the vendor take his sweet time to correct the compliance. Yes, for genuine taxpayer and for genuine scenario there must be a special window from Govt to claim that credit as an exceptional case.

[Shilpi Jain]

The said rule was amended retrospectively.

[priyehs agrawal]

Althogh petitions are pending with supreme court against 16(4). I have my own view:

16(4) holds goods when it restrict the claim of ITC for the month of March 23 if it is claimed in return of Dec 2023. This will restrict the dual claim of ITC in future months. However issue arises when Return for March 23 was filed in Dec 23. Department is raising demand in this case too, in my view since late fee is already paid for delayed filling, that delayed is condoned and once delayed is condoned it must be deemed that return is filed within the time limit and ITC must be allowed.

[KASTURI SETHI]

Mere filing of return with a delayed fee will not act as a springboard for claiming ITC ----High Court Andhra Pradesh reported as . Order dated 18.7.23  in the case of Thirumalakonda  Plywoods Vs. A.C. State Tax - 2023 (7) TMI 1226.

[RAKESH R]

Dear Friends

With due respect to all your comments and replies, I wish to say that the problem / shut down faced by industry due to COVID 19 pandemic during the said period.  Further, when Government has extended the due date for completion of assessment orders for 2017-18, 2018-19 and 2019-20 using the powers vested under Section 168A of the CGST Act taking the COVID 19 as a 'force majeure' when the Department officers have three years time to complete the assessment.  COVID 19 has not only the Department Officers but also the business community.  When Government decides to give relief to Tax Administrators to extend time for passing orders on litigtion why not the same Government should extend the relief to assessees on limitation for the financial years 2017-18 to 2019-20.  Even appeals are allowed to file by extending the limitation period.  Hence, my view is ' TO GIVE ROOM FOR EASE OF DOING BUSINESS', the Government should come out with some relief package to the industry as LOSS OF ITC has a great impact on the financial issues of the industries.

S. GOKARNESAN

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