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TMI Blog2021 (4) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... financial year of 2020-21 towards transactions for the period 2018-19? - HELD THAT:- From a combined reading of the definition of debit note , sub-section (3) of Section 34 of the CGST Act, 2017 and the particulars to be provided in a debit note issued under GST, it is amply clear that the debit note is not an independent document or an invoice in itself and is connected to an invoice as it is issued in pursuance to change in value of an invoice. It, therefore, follows that the financial year to which a debit note pertains, is invariably the financial year in which the original invoice (related to the said debit note) was issued - in light of the provisions of amended sub-section(4) of Section 16 of the CGST Act, 2017(amended w.e.f. 01.01.2021), it is concluded that the applicant shall be entitled to claim the input tax credit only in respect of debit notes issued by the supplier towards the transactions entered into and goods supplied to the applicant during the financial year 2018-19, on or before the due date of furnishing of the return under section 39 for the month of September following the end of the said financial year 2018-19 or furnishing of the relevant annual return, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isation in its Harmonized Commodity Description of Coding System (hereinafter referred to as 'HSN'). Hence, wherever a Chapter of Customs Tariff is aligned with the corresponding Chapter of HSN, then the HSN explanatory notes explaining the scope of headings of that Chapter would have persuasive value in the determination of scope of headings of correspondence Chapter of Central Excise Tariff. The aforesaid position has been laid down by the Hon'ble Supreme Court in the following decisions: (a) Camlin limited vs. CCE-2008 (230) ELT 193 (SC). (b) Coen Bharat Limited vs. CCE-2007 (217) ELT 165 (SC). (c) CCE vs. Bakelite Hylam Limited-1997 (91) ELT 13 (SC). 4. The applicant has further submitted there is ample jurisprudence available wherein it was held that for classification of goods, harmonized system of nomenclature is a safe and internationally accepted base; that in Collector of Central Excise Shillong vs. Wood Crafts Pvt. Ltd. (1995) 3 SCC 454, it was held by the Apex Court that: "12. It is significant, as expressly stated, in the Statement of Objects and Reasons, that the Central Excise Tariffs are based on the HSN and the internationally accepted nomenclature was tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d attract CGST 6% and SGST 6%. Therefore, the applicant has requested the Advance Ruling Authority that Plastic Toys other than Electronic Toys manufactured and supplied by the applicant may be held to be classifiable under Tariff Heading 9503 00 30 attracting CGST 6% and SGST 6%. 6. As regards the claim of Input Tax Credit, the applicant has submitted that the supplier of the applicant is seeking to issue debit notes in relation to transactions entered into and goods supplied to the applicant during the period 2018-19; that the debit notes proposed to be issued are in relation to price variation as the supplier had mistakenly charged low price and the said error was noticed by the supplier recently and hence, the supplier desires to rectify the same and proposes to issue debit notes to the applicant whereby CGST and SGST shall be reflected separately. The applicant has further submitted that recently amendment in sub-section 4 of Section 16 has been proposed which has done away with the condition of invoice to debit note correlation; that the earlier language using the words "invoice relating to such" before the words "debit note pertains" have been omitted vide the Finance Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o mean a reference to similar provisions of the GGST Act. 10. Based on the submission of the applicant as well as the arguments/discussions made by the representative of the applicant during the course of personal hearing, we find that there are two issues to be decided i.e. (i) the classification of their product "Plastic Toys" (ii) Whether applicant can claim input tax credit of CGST-SGST charged separately in debit notes issued by the supplier in current financial year of 2020-21 towards transactions for the period 2018-19. We will first determine the classification of the aforementioned product of the applicant but before doing that, we will be required to refer to the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 containing the headings, sub-headings as well as the rates of Central Tax GST applicable to various goods which are covered under 6 schedules as under: (i) 2.5 per cent. in respect of goods specified in Schedule I, (ii) 6 per cent. in respect of goods specified in Schedule II, (iii) 9 per cent. in respect of goods specified in Schedule III, (iv) 14 per cent. in respect of goods specified in Schedule IV, (v) 1.5 per cent. in respect of goods sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 65; (h) walking-sticks, whips, riding-crops or the like (heading 6602), or parts thereof (heading 6603); (ij) unmounted glass eyes for dolls or other toys, of heading 7018; (k) parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods of plastics (Chapter 39); (l) bells, gongs or the like of heading 8306; (m) pumps for liquids (heading 8413), filtering or purifying machinery and apparatus for liquids or gases (heading 8421), electric motors (heading 8501), electric transformers (heading 8504), discs, tapes, solid-state non-volatile storage devices, "smart cards" and other media for the recording of sound or of other phenomena, whether or not recorded (heading 8523), radio remote control apparatus (heading 8526) or cordless infrared remote control devices (heading 8543); (n) sports vehicles (other than bobsleighs, toboggans and the like) of Section XVII; (o) children's bicycles (heading 8712); (p) sports craft such as canoes and skiffs (Chapter 89), or their means of propulsion (Chapter 44 for such articles made of wood); (q) spectacles, goggles or the like, for sports or outdoor games (heading 9004); (r) decoy calls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t not made of metal, wood or plastics) can be classified; that therefore, the applicant's product i.e. Plastic toys, which are essentially made of plastic, should be classified under Tariff Item No.9503 00 30 itself. 14. We have gone through the relevant Heading 9503 as well as the Chapter Notes pertaining to Chapter 95 of the First Schedule to the Customs Tariff Act, 1975 which covers various kinds of toys for children such as Tricycles, scooters, pedal cars and similar wheeled toys, dolls' carriages, dolls, other toys, reduced-size ("scale") models and similar recreational models, working or not as well as puzzles of all kinds. We have also seen the pictures/photographs of some of the Plastic toys given by the applicant alongwith their submission as well as some of the samples of toys shown/produced by the representative of the applicant during the course of personal hearing. After going through the above, and comparing the same to the issue in hand, we find that the said toys are made of plastic meant for children and are not electronic toys, and therefore conclude that the plastic toys manufactured and supplied by the applicant are correctly classifiable under Heading 9503 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SGST shall be reflected separately. The applicant has further submitted that recently amendment in sub-section 4 of Section 16 has been proposed which has done away with the condition of invoice to debit note correlation; that the earlier language using the words "invoice relating to such" before the words "debit note pertains" have been omitted vide the Finance Act, 2020 No.12 of 2020 and such amendment has received assent of the Honorable President on 27.03.2020; that the applicant believes that the law has been amended and has been made more simple so as to enable the assessee to claim Input Tax Credit of past periods also where the error occurred in past periods is noticed in subsequent periods. The earlier words "invoice relating to such debit note" were restricting the claims to Input Tax Credit to a particular time limit and if for genuine reasons supplier is not able to provide details or recipient is unable to claim Input Tax Credit then it would result in lapse of such Input Tax Credit which otherwise was legitimate right of an assessee and this anomaly was detected and recognized by Government and vide the Finance Act, 2020 No.12 of 2020, the same has been corrected and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier." 19. On comparing the above, with that of the provisions of sub-section(4) of Section-16 as existing prior to the introduction of the Finance Bill, 2020, we find that the amendment proposed to have been made in the said sub-section does not appear to have been made till 30.09.2020. However, as per Notification No.92/2020-Central Tax(Rate) dated 22.12.2020, the Central Government has appointed 01.01.2021 as the date on which the provisions of Sections 119, 120, 121, 122, 123, 124, 126, 127 and 131 of the Finance Act, 2020 (12 of 2020) shall come into force. The said Notification reads as under: "In exercise of the powers conferred by sub-section (2) of section 1 of the Finance Act, 2020 (12 of 2020) (hereinafter referred to as the said Act), the Central Government hereby appoints the 1st day of January, 2021, as the date on which the provisions of sections 119, 120, 121, 122, 123, 124, 126, 127 and 131 of the said Act shall come into force." In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions for the period 2018-19. It, therefore, appears, that the applicant is interpreting the aforementioned changes in his own way to suit/support his contention. We therefore, completely disagree with the view of the applicant when they state that the earlier words "invoice relating to such debit note" were restricting the claims to Input Tax Credit to a particular time limit and this anomaly was detected and recognized by Government vide the Finance Act, 2020 No.12 of 2020. We are of the opinion that the aforementioned change affected as a result of Finance Act, 2020 has not brought about any drastic or far-reaching change in the interpretation of sub-section(4) of Section 16, and even if a debit note issued by a supplier in connection with an invoice due to increase in price of a particular commodity, is issued in a different financial year than that of the financial year in which the original invoice was issued, the financial year to which the debit note pertains, will always be considered to be the year in which the original invoice was issued. In this regard, in order to bring more clarity to the issue in hand, we find it imperative to refer to the definition of 'debit note' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the original invoice issued by the supplier and to take credit of the same in his input tax credit account. Thus from a combined reading of the definition of 'debit note', sub-section (3) of Section 34 of the CGST Act, 2017 and the particulars to be provided in a debit note issued under GST, it is amply clear that the debit note is not an independent document or an invoice in itself and is connected to an invoice as it is issued in pursuance to change in value of an invoice. It, therefore, follows that the financial year to which a debit note pertains, is invariably the financial year in which the original invoice (related to the said debit note) was issued. In view of the aforementioned discussions, and in light of the provisions of amended sub-section(4) of Section 16 of the CGST Act, 2017(amended w.e.f. 01.01.2021), we conclude that the applicant shall be entitled to claim the input tax credit only in respect of debit notes issued by the supplier towards the transactions entered into and goods supplied to the applicant during the financial year 2018-19, on or before the due date of furnishing of the return under section 39 for the month of September following the end of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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