Clarifications and Relaxation for
Availing Input Tax Credit under Sec 16(6)(5)
[Circular No. 237/31/2024-GST dated 15th
October 2024]
Subject:
Clarifying the issues regarding implementation of provisions of sub-section (5)
and sub-section (6) in section 16 of CGST Act, 2017.
Reference
is invited to sub-section (5) and sub-section (6) of section 16 of the Central
Goods & Services Tax Act, 2017 (hereinafter referred to as the CGST Act)
inserted in section 16 of the CGST Act, with effect from the 1st day of July,
2017, vide section 118 of the Finance (No. 2) Act, 2024, whereby the time limit
to avail input tax credit under provisions of sub-section (4) of section 16 of
CGST Act has been retrospectively extended in certain specified cases.
1.2 Sub-section
(4), sub-section (5) and sub-section (6) of section 16 of the CGST Act are
reproduced below for ready reference:
(4)A
registered person shall not be entitled to take input tax credit in respect of
any invoice or debit note for supply of goods or services or both after the
thirtieth day of November following the end of financial year to which such
invoice or debit note pertains or furnishing of the relevant annual return,
whichever is earlier.
Provided
that the registered person shall be entitled to take input tax credit after the
due date of furnishing of the return under section 39 for the month of
September, 2018 till the due date of furnishing of the return under the said
section for the month of March, 2019 in respect of any invoice or invoice
relating to such debit note for supply of goods or services or both made during
the financial year 2017-18, the details of which have been uploaded by the
supplier under sub section (1) of section 37 till the due date for furnishing
the details under sub-section (1) of said section for the month of March, 2019.
(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 upto the thirtieth day of November, 2021.
(6) Where
registration of a registered person is cancelled 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 upto 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.
1.3 Further,
it has been provided in section 150 of the Finance (No.2) Act, 2024 (reproduced
below), that no refund of any tax paid or the input tax credit reversed shall
be granted on account of the said retrospective insertion of sub-section (5)
and sub-section (6) of section 16 of the CGST Act.
150. No
refund shall be made of all the tax paid or the input tax credit reversed,
which would not have been so paid, or not reversed, had section 118 been in
force at all material times.
1.4 Besides,
vide Notification No. 22/2024 Central tax dated 08.10.2024, a special
procedure for rectification of orders has been notified under section 148 of
the CGST Act, to be followed by the class of taxable persons, against whom
orders under section 73 or section 74 or section 107 or section 108 of the CGST
Act have been issued confirming demand for wrong availment
of input tax credit on account of contravention of provisions of sub-section
(4) of section 16 of the CGST Act, but where such input tax credit is now
available as per the provisions of sub-section (5) or sub-section (6) of
section 16 of the CGST Act, and where appeal against the said order has not
been filed.
1.5 Representations
have been received from trade and industry requesting for clarification in
respect of various issues pertaining to availment of
benefit of the said amendments in section 16 of CGST Act to the taxpayers
against whom demands have been issued alleging wrong availment
of input tax credit in contravention of provisions of sub-section (4) of
section 16 of CGST Act, who are now entitled to avail the said input tax credit
as per the retrospectively inserted provisions of sub-section (5) or
sub-section (6) of section 16 of the CGST Act.
2. In
order to ensure uniformity in the implementation of the provisions of law
across the field formations, the Board, in exercise of its powers conferred by
section 168 (1) of the CGST Act, hereby clarifies the issues as below.
3. The
following action may be taken by the tax authorities and/ or the taxpayers in
various scenarios for availment of benefit on account
of retrospectively inserted provisions of sub-section (5) or sub-section (6) of
section 16 of the CGST Act:
3.1 Where no demand notice/statement has been issued under
section 73 or section 74 of the CGST Act:
In
cases, where any investigation/proceedings in respect of wrong availment of input tax credit alleging contravention of
provisions of sub-section (4) of section 16 of the CGST Act has been initiated,
but no demand notice/statement under section 73 or section 74 of the said Act
has been issued, and taxpayers are now entitled to avail the said input tax
credit under the provisions of sub-section (5) or sub-section (6) of section 16
of the CGST Act, the proper office shall take cognizance of the sub-section (5)
or sub-section (6) of section 16 of CGST Act, inserted retrospectively with
effect from 01.07.2017 and take further appropriate action. This also includes
the cases where an intimation in FORM DRC-01A has been issued under rule
142(1A) of the CGST Rules for denial of input tax credit on account of
contravention of sub-section (4) of section 16 of the said Act, but no demand
notice/statement under section 73 or section 74 of the said Act has been
issued.
3.2 Where demand notice/ statement under section 73 or
section 74 of CGST Act has been issued but no order under section 73 or section
74 of CGST Act has been issued by the Adjudicating Authority:
In
such cases, the Adjudicating Authority shall take cognizance of sub-section (5)
or sub-section (6) of section 16 of the CGST Act, inserted retrospectively with
effect from 01.07.2017, and pass appropriate order under section 73 or section
74 of the CGST Act.
3.3
Where order under section 73 or section 74 of the CGST Act has been issued and
appeal has been filed under section 107 of the CGST Act with the Appellate
Authority but no order under section 107 of the CGST Act has been issued by the
Appellate Authority:
In
such cases, the Appellate Authority shall take cognizance of sub-section (5) or
sub-section (6) of section 16 of the CGST Act, inserted retrospectively with
effect from 01.07.2017, and pass appropriate order under section 107 of the
CGST Act.
3.4
Where order under section 73 or section 74 of the CGST Act has been issued and
Revisional Authority has initiated proceedings under section 108 of the CGST
Act, but no order under section 108 of the CGST Act has been issued by the
Revisional Authority:
In
such cases, the Revisional Authority shall take cognizance of sub-section (5)
or sub-section (6) of section 16 of the CGST Act, inserted retrospectively with
effect from 01.07.2017, and pass appropriate order under section 108 of the
CGST Act.
3.5
Where order under section 73 or section 74 of the CGST Act has been issued but
no appeal against the said order has been filed with the Appellate Authority,
or where the order under section 107 or section 108 of the CGST Act has been
issued by the Appellate Authority or the Revisional Authority but no appeal
against the said order has been filed with the Appellate Tribunal:
In such
cases, where any order under section 73 or section 74 or section 107 or section
108 of the CGST Act has been issued confirming demand for wrong availment of input tax credit on account of contravention
of provisions of sub-section (4) of section 16 of the CGST Act, but where such
input tax credit is now available as per the provisions of sub-section (5) or
sub-section (6) of section 16 of the CGST Act, and where appeal against the
said order has not been filed, the concerned taxpayer may apply for rectification
of such order under the special procedure under section 148 of the CGST Act
notified vide Notification No. 22/2024 Central tax dated 08.10.2024, within a
period of six months from the date of issuance of the said notification.
3.5.1
The taxpayers can file an application for rectification electronically, after
login to www.gst.gov.in, using their
credentials, by navigating as below in various cases:
a. In case where an
application for rectification of an order issued under section 73 or section 74
of the CGST Act is to be filed:
i. Click Dashboard
> Services > User Services > My Applications.
ii. Select "Application for rectification of order" in the
Application Type field. Then, click the NEW APPLICATION button.
b. In case where an application
for rectification of an order issued under section 107 of the CGST Act is to be
filed:
i. Click Dashboard > Services > User Services > View
Additional Notices/Orders
ii. Additional Notices
and Orders page is displayed. Click the View hyperlink to go to the Case
Details screen of the issued Notice/Order.
iii. Case Details page
is displayed. The APPLICATIONS tab is selected by default. Select the ORDERS tab
and click the "Initiate Rectification" link.
c. In case where an
application for rectification of an order issued under section 108 of the CGST
Act is to be filed:
i. Click Dashboard > Services > User Services > View
Additional Notices/Orders
ii. Additional Notices
and Orders page is displayed. Click the View hyperlink to go to the
Case Details screen of the issued Notice/Order.
iii. Case Details page
is displayed. The NOTICES tab is selected by default. To submit
Rectification Request against the Revision Order issued to you by the
Revisional Authority, select the ORDERS tab and click the "Initiate
Rectification" link.
3.5.2 While filing such application for rectification of order, the
taxpayer shall upload along with the application for rectification of order,
the information in the proforma in Annexure A of the said notification,
containing inter-alia the details of the demand confirmed in the said
order of the input tax credit wrongly availed on account of contravention of
sub-section (4) of section 16 of the CGST Act, which is now eligible as per
sub-section (5) and/or sub-section (6) of section 16 of the CGST Act.
3.5.3
Such
application for rectification shall be dealt by the proper officer who had
passed the order for which the said rectification application has been filed.
The said officer shall take a decision on the said application for
rectification and issue the order, as far as possible, within a period of three
months from the date of such application. Besides, in case where any
rectification is being made by the proper officer in the order for which the
rectification application has been filed, he shall also upload a summary of the
rectified order electronically in FORM DRC-08 in cases where
rectification of an order issued under section 73 or section 74 of the CGST Act
is being made, and in FORM GST APL-04, in cases where rectification of
an order issued under section 107 or section 108 of the said Act is being made.
While taking a decision on such application for rectification filed under the
said special procedure, the proper officer shall also consider other grounds,
if any, for denial of input tax credit, other than contravention of sub-section
(4) of section 16 of the CGST Act, invoked in the concerned notice issued under
section 73 or section 74, as applicable, in respect of the said amount of input
tax credit.
3.5.4
Where the
rectification adversely affects the said person, the principles of natural
justice shall be followed by the said proper officer.
3.5.5 Further,
it is to be noted that in cases where any rectification has been made by the
proper officer in the order for which the rectification application has been
filed, an appeal against such rectified order can be filed under the provisions
of section 107 or section 112 of the CGST Act, as the case may be, within the
time limit specified therein.
4. It is pertinent to note
that in terms of section 150 of the Finance (No. 2) Act, 2024, no refund of tax
already paid or input tax credit already reversed would be available, where
such tax has been paid or input tax credit has been reversed on account of
contravention of provisions of sub-section (4) of section 16 of the CGST Act,
and where such input tax credit is now available as per the provisions of
sub-section (5) or sub-section (6) of section 16 of the CGST Act.
5. It is to be noted that the
rectification application of an order issued under section 73 or section 74 or
section 107 or section 108 of the CGST Act, can be filed under the special
procedure notified vide notification No. 22/2024 Central tax dated
08.10.2024, within a period of six months from the date of issuance of the said
notification, only in cases where the issue or one of the issues on which the
demand has been confirmed in the said order, pertains to wrong availment of input tax credit on account of contravention
of provisions of sub-section (4) of section 16 of the CGST Act, and where such
input tax credit is now available as per the provisions of sub-section (5) or
sub-section (6) of section 16 of the CGST Act. In cases where no such issue is
involved and a taxpayer requires to file an application of rectification of an
order, such rectification application can be filed by the taxpayers only under
the provisions of section 161 of the CGST Act, within the time limit specified
therein. In case a taxpayer has filed an application for rectification of an
order under the special procedure notified vide notification No. 22/2024
Central tax dated 08.10.2024, but where it is found that the issues in the said
order do not involve any issue of wrong availment of
input tax credit on account of contravention of provisions of sub-section (4)
of section 16 of the CGST Act, and where such input tax credit is now available
as per the provisions of sub-section (5) or sub-section (6) of section 16 of
the CGST Act, such an application would be summarily rejected by the proper
officer with a remark that, The rectification application is rejected as it
is found that the same is not covered under the notification No. 22/2024
Central tax dated 08.10.2024, as no such issue is involved in the said order
pertaining to wrong availment of input tax credit on
account of contravention of provisions of sub-section (4) of section 16 of the
CGST Act, and where such input tax credit is now available as per the
provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act.
6. It is requested that
suitable trade notices may be issued to publicize the contents of this
Circular.
7. Difficulty, if any, in the
implementation of this Circular may be brought to the notice of the Board.
F. No. CBIC-20001/6/2024-GST