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TMI Blog2022 (12) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... ression inasmuch as restricts the scope of ineligibility to the conditions as set out in sub clauses of Rule 86A(1) of the CGST Rules. It is only if any of these conditions are satisfied that the restriction under Rule 86A(1) can be imposed in respect of ITC on the ground that the ITC available in the taxpayer s ECL is ineligible . Scope of Section 16(2) of the GST Act read with Rule 37 of CGST Rules - It is, clearly, not the scheme of the CGST Act to restrain a person from availing the ITC till he has paid the supplier for such goods/services. A recipient of goods/services who receives goods and services on supplier s credit is also entitled to avail the ITC. However, if he fails to discharge his liability within a period of 180 days (one hundred and eighty days), he is liable to disgorge the benefit of the ITC along with interest. The taxpayer s liability to account for the ITC availed without paying for the same within the period of 180 days, is required to be assessed as a part of his output liability. If the taxpayer does not discharge his liability to the supplier within a period of 180 days, he is required to account for the benefit of the ITC availed by the taxpa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ish the list of documents required for unblocking the ECL. In response to the aforesaid e-mail, the respondents sought certain documents including copies of the Bills of Entry reflecting the IGST paid on import of goods for the financial year 2017-18 to financial year 2020-21; copy of the GSTR 2A reflecting the IGST paid on account of import for the financial year 2017-18 to financial year 2020-21; and, comparative statements of GSTR-1 and GSTR-3B and GSTR-2A and GSTR-3B for the financial year 2017-18 to financial year 2020-21. It is stated that these documents were provided by the petitioner. Thereafter, the petitioner submitted further documents to the respondents under cover of his communication dated 18.10.2021 and 02.11.2021 as well. 4. Respondent no.2 issued a letter dated 12.11.2021, directing the petitioner to deposit interest on account of non-payment of consideration to a supplier (D.G. Impex), within a period of 180 days as required in terms of Section 16(2) of the Central Goods and Services Tax Act, 2017 (hereafter the CGST Act ) and Rule 37 of the CGST Rules. The petitioner disputes the said demand. He claims that he is not required to pay any interest on the ITC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m in this behalf, not below the rank of an Assistant Commissioner, having reasons to believe that credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible in as much as (a) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36- (i) issued by a registered person who has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or (ii) without receipt of goods or services or both; or (b) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36 in respect of any supply, the tax charged in respect of which has not been paid to the Government; or (c) the registered person availing the credit of input tax has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or (d) the registered person availing any credit of input tax is not in possession of a tax invoice or debit note or any other document prescribed under rule 36, may, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onary of Modern Legal Usage by Bryan A. Garner, second edition, the expression inasmuch as is defined as: In modern AmE usage, the standard spelling of each group is inasmuch as and insofar as, both single words except for the final element. In modern BrE, usage is split: inasmuch as is standard and the expression in so far as is preferred as four separate words. However the phrase is spelled, through, inasmuch as is almost always inferior to because or since. 15. If the expression inasmuch as is considered as synonymous with because or since , the sub clauses of Rule 86A(1) of the CGST Rules would qualify the word ineligible and exclude the possibility of expanding the import of the said word. In Empire State Bldg. Corp. v. City of N.Y; 274 N.Y.S.2d 208, the Appellate Division of the Supreme Court of New York, First Department, interpreted the meaning of a clause that read as: this act shall not authorize the imposition of a tax on any transaction by or with the United States of America insofar as it is immune from taxation. . The court construed the said clause, which used the expression insofar as , to restrict the immunity from taxation only to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of goods, either by way of transfer of documents of title to goods or otherwise; (ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person;] [(ba) the details of input tax credit in respect of the said supply communicated to such registered person under Section 38 has not been restricted;] (c) subject to the provisions [of section 41], the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 39: Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment: Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to account for the benefit of the ITC availed by the taxpayer along with interest as a part of the output liability. In terms of the third proviso to Section 16(2) of the CGST Act, the taxpayer would be entitled to avail of the ITC once again on payment being made to the supplier. 23. Rule 37 of the CGST Rules provides for the mechanism for reversal of the ITC availed in case of non-payment of consideration. The said Rule is set out below: RULE 37. Reversal of input tax credit in the case of non-payment of consideration.-( 1)A registered person, who has availed of input tax credit on any inward supply of goods or services or both, but fails to pay to the supplier thereof, the value of such supply along with the tax payable thereon, within the time limit specified in the second proviso to subsection(2) of section 16, shall furnish the details of such supply, the amount of value not paid and the amount of input tax credit availed of proportionate to such amount not paid to the supplier in FORM GSTR-2 for the month immediately following the period of one hundred and eighty days from the date of the issue of the invoice: Provided that the value of supplies made without ..... X X X X Extracts X X X X X X X X Extracts X X X X
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