Time Limit To Avail ITC Is Till 30th November In Each Financial Year From Beginning Of GST Regime: Kerala High Court

The Kerala High Court has held that the time limit to avail ITC is November 30th in each financial year from the beginning of the GST regime.

The bench of Justice Dinesh Kumar Singh has observed that prior to the amendment in Section 39 by the Finance Act 2022, the date for furnishing the return under Section 39 was September 30th. Considering the difficulties in the initial stage of the implementation of the GST regime, the Legislature made the amendment and extended the time for filing the return from September to November 30th in each succeeding financial year. The amendment is only procedural to ease the difficulties initially faced by the dealers and taxpayers. Therefore, for the period from 01.07.2017 till 30.11.2022, if a dealer has filed the return after September 30 and the claim for ITC was made before November 30, the claim for ITC of such dealer should also be processed if he is otherwise entitled to claim the ITC.

"...if a person has furnished the return for the month of September till 30th November, their claim should also be considered and processed and should not be rejected if the dealer did not furnish the return for the month of September on or before 20th October. This amendment being procedural has to be given retrospective effect and, therefore, it is provided that it should be treated that the time limit for furnishing the return for the month of September is 30th November in each Financial Year with effect from 01.07.2017, considering the peculiar nature of difficulties in the initial period of implementation of the GST regime."

The batch of petitions filed challenging Sections 16(2)(c) and 16(4) of the Central Goods and Services Tax Act and State Goods and Services Act, 2017.

Section 16(4) of the CGST Act laid down a specified time frame in which a registered taxpayer is required to claim input tax credit. As per Section 16(2)(c), a registered person cannot claim credit for any input tax related to a supply of goods or services unless the tax charged for that supply has been paid to the government, either in cash or through the utilization of admissible input tax credit.

The petitioners have submitted that the petitioners, who were registered dealers under the provisions of the CGST Act and KSGST Act, 2017, are being denied the claim of input tax credit despite being in possession of a valid tax invoice, proof of payment of the value of goods along with GST components to the respective suppliers, and receipt of the goods. In some cases, the respective supplier had remitted the tax (GST) but not reflected it in their return GSTR due to some technical reasons. Another category of petitioners is those who have received the goods or services and have valid tax invoices, proof of payment of the value of the goods, and the GST component to the respective suppliers, but the respective suppliers have not remitted the GST on the supply made by them to the petitioners. The third category of petitioners are those who are in possession of an invoice but have no clear proof of payment of consideration or tax towards the inward supply and might not have received goods in their possession. The first of the three categories of petitioners, who are recipients of the goods supplied to them by the supplier dealers, is covered in Circular No. 183/15/2022-GST, dated December 27, 2022, issued by the Central Board of Indirect Taxes and Customs.

The petitioners submitted that the GSTR-2A is an auto-populated, dynamic, read-only document containing details of inward supplies based on details of outward supplies filed by the purchasing dealer. Form GSTR-2A is only a facilitator for making a confirmed decision while doing self-assessment. Non-performance or non-operability of Form GSTR-2A, or, for that matter, the other forms, should be of no avail because a registered person is obliged to submit a return on the basis of such self-assessment in the Form prescribed manually on an electronic platform. Non-availability of the payment of tax in GSTR-2A cannot impact the entitlement of the taxpayers to avail the input tax credit on a self-assessment basis in consonance with the provisions of Section 16 of the GST Act. In its press release dated October 18, 2018, the CBIC clarified that furnishing output details in Form GSTR-1 by the corresponding supplier(s) and the facility to view the same in Form GSTR-2A by the recipients is in the nature of taxpayer facilitation and does not impact the entitlement of taxpayers to avail themselves of ITC on a self-assessment basis in consonance with the provisions of Section 16 of the Act. It is therefore submitted that the claim for input tax credit, for which the recipient is otherwise eligible, should not be denied merely on the basis of the basis of the difference between GSTR-2A and GSTR-3B.

The petitioner contended that by invoking the provisions of Section 16(2)(c) of the GST Act to deny input tax credit to the bona fide purchaser dealers, the respondents would be treating both the purchaser dealers who collude with the supplier dealers to claim false credit of ITC and innocent and bona fide purchaser dealers who have paid the tax to the supplier dealers equally. Section 16(2)(c) confers unchecked powers on the respondent authorities to treat bona fide and genuine purchaser dealers and guilty purchasers alike. The equal treatment of bona fide or innocent purchasers and guilty purchasers is violative of Article 14 of the Constitution of India. It is further submitted that denial of ITC to a bona fide purchaser dealer who is the recipient of the goods because of the default of the supplier dealer in not making the payment of GST, though the supplier dealer has collected it from the recipient of the goods, would tantamount to shifting the incidence of tax from the supplier to the recipient.

The court held that the time limit for furnishing the return for the month of September is to be treated as November 30th in each financial year with effect from July 1, 2017, in respect of the petitioners who had filed their returns for the month of September on or before November 30th, and their claim for ITC should be processed if they are otherwise eligible for ITC.

So far as the challenge to the constitutional validity of Section 16(2)(c) and Section 16(4) is concerned, the same was rejected by the Court.

Counsel For Petitioner: Meera V.Menon, KP Pradeep, KP Abdul Azeez, Aji V Dev, Alan P Dev

Counsel For Respondent: Muhamed Rafiq

citation: 2024 LiveLaw (Ker) 341

Case Title: M/S M.Trade Links Versus Union Of India

Case No.: WP(C) NO. 31559 OF 2019

Click Here To Read The Order