by R.SRIVATSAN, IRS, NACIN, Chennai
The 54th GST Council meeting has recommended rectification processes related to the ITC for demands under section 73, 74, 107 and 108 of the CGST Act, 2017.
The Council recommended that section 118 and 150 of the Finance (No.2) Act, 2024, which provides for insertion of sub-section (5) and sub-section (6) in Section 16 of CGST 2017 retrospectively w.e.f 01.07.2017 may be notified at the earliest.
Issues related to wrong availment of Input Tax Credit (ITC) by the taxpayers.
Special procedure for rectification of orders u/s 148 of the CGST Act, 2017 will be followed by the class of taxable persons, against whom any order u/s 73 or 74 or section 107 or 108 of CGST Act has been issued confirming demand for wrong availment of ITC on account of contravention of provisions of sub-section (4) of section 16 of the CGST Act, but where such ITC is now available as per newly inserted provisions of sub-section (5) or sub-section (6) of section 16 of CGST Act 2017.
The wrong availment of ITC due to non-filing of returns by the sellers has caused a lot of trouble for the buyers.
In fact, section 16(4), CGST Act 2017 has succeeded in reducing these issues in related to the availment of ITC to an extent but still in many cases recipient of supply were being issued with the notice u/s 73, 74, 107 and 108 of CGST Act 2017, for no fault of them.
Therefore, the introduction of 16(5) and 16(6) of CGST Act, 2017 will resolve the issues on availment of ITC.
Well……
According to Section 16(5) and 16(6) CGST Act :
Sec.16(5):-
Notwithstanding anything contained in sub-section (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under section 39 which is filed up to the thirtieth day of November, 2021.
Section 16 (6):-
Where registration of a registered person is canceled under section 29 and subsequently the cancellation of registration is revoked by any order, either under section 30 or pursuant to any order made by the Appellate Authority or the Appellate Tribunal or court and where availment of input tax credit in respect of an invoice or debit note was not restricted under sub-section (4) on the date of order of cancellation of registration, the said person shall be entitled to take the input tax credit in respect of such invoice or debit note for supply of goods or services or both, in a return under section 39,– (i) filed up to thirtieth day of November following the financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier; or (ii) for the period from the date of cancellation of registration or the effective date of cancellation of registration, as the case may be, till the date of order of revocation of cancellation of registration, where such return is filed within thirty days from the date of order of revocation of cancellation of registration, whichever is later.] The Council also recommended issuance of a circular to clarify the procedure and issues related to the implementation of the provision of 16(5) and 16(6) of CGST Act, 2017.
Lot of disputes, appeals, refunds and pre-deposit, refund of pre-deposits and similar obligations causing financial stresses on the business and procedural compliances by tax administration will get resolved by this progressive move.
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