Authority for Advance Ruling, Andhra Pradesh, in its recent ruling in the case of M/s. Vishnu Chemicals Limited has held that Input Tax Credit cannot be availed in respect of tax invoices raised with delay in respect of services supplied in earlier period whose period of limitation as per Section 16(4) has expired.
Facts of the Case:
The applicant M/s. Vishnu Chemicals Limited is engaged in manufacture of Basic Chromium Sulphate, Sodium Sulphate and Chromic Acid. For the purpose of storing the raw materials and finished goods, the Applicant needed some additional storage space and therefore, entered into lease agreement with M/s Usha Tubes and Pipes Pvt. Ltd (UTPL).
The Applicant submitted that, for the period April 2018 to March 2019, UTPL issued a single tax invoice mentioning in the description as “Rental charges” for the month from April 2018 to March 2019 by showing rent month-wise for 12 months.
The Applicant contended that, as per Section 16(4) of the CGST Act,2017 for the tax invoice dated April 1, 2020, the Applicant is entitled to claim ITC on or before filing the GSTR 3B for September 2021 or the date of filing of Annual Return for the year 2020-2021, whichever is earlier.
The Applicant further submitted that, the restriction under Section 16(4) of the CGST Act does not apply to the aforesaid tax invoice dated April 1, 2020 issued in the instant case for renting services supplied in the year 2018- 2019. Therefore, the Applicant is entitled to avail ITC for the aforesaid tax invoice.
Issues raised before the AAR:
- Whether the tax invoice dated 1st April 2020 issued by M/s UTPL for rental service for the year 2018-19 is hit by the limitation for claiming ITC under Section 16(4) of the CGST Act.
- Whether the tax invoice dated 1st April 2020 is eligible for ITC if claimed before filing GSTR 3B return for September 2021 or Annual return for the year 2020-21 in terms of Section 16(4) of the CGST Act.
Order of the AAR: Deliberation and Ruling:
In the instant case the ‘tax invoice’ is issued by the lessor on 01.04 2020 for the services supplied in the financial year 2018-2019. For any transaction, the tax invoice is the primary document evidencing the supply and vital for availing input tax credit’ Now we look into the aspect of the ‘issuance of tax invoice. as per the provisions of the Act.
Section 31 (2) A registered person supplying taxable services shall, before or after the provision of service but within a prescribed period, issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be prescribed.
The Act prescribes certain conditions for the issuance of tax invoice in case of supply of services, among which Rule 47 prescribes the time limit for issuing of tax invoice.
“Rule 47. The invoice referred to in rate 46, in the case of the taxable supply of services, shall be issued within a period of thirty days from the date of the supply of services.”
If we look into the present case ,it is evident that the invoice has not been issued within the stipulated time as prescribed by the act’
The second part of the question is that whether the invoice mentioned above is hit by the limitation for claiming ITC under sub-section (4) of Section 16 of the CGST/SGST Act,2017.
Section 16 lays down the eligibility and conditions for taking input tax credit which reads as under.
“16 (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 due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.”
ITAT observed that in the instant case, the invoice which was raised on 01.04.2020 does not pertain to that financial year of 2020-21, but pertains to the financial year of 2018-2019 in which the services were received.
In view of above deliberations ITAT held as under:
The invoice referred pertains to the Services rendered in the financial year 2018-2019 and hence it is hit by the limitation for claiming lTC under Section 16( 4 ) and hence ITC cannot be availed of such invoice before filing GST return for September 2021/Annual Return for 2020-2021.
READ / DOWNLOAD ORDER:
***
Don’t miss the next Tax Update / Article / Judicial pronouncement
Subscribe to our newsletter for FREE to stay updated on GST Law
Resolve your GST queries from national level experts on GST free of cost
Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
