ITC Question No. 270

QUESTION

A Registered firm having filed GSTR1and GSTR3B discovered that he has forgot to declare few Invoices raised in March 2021 in GSTR1 and GSTR3B and later in the month of July 2021 deposited the Taxes due through DRC03 and mentioned the reasons thereof in DRC-03 and uploaded the copies of the Invoices. Due to the fact that these Invoices were not shown in GSTR1, the customer has not got any ITC credit although the seller has paid the Taxes due thereon . Whether the Customer can claim any ITC based on the copy of the DRC-03 filed by the supplier

ANSWER

FACTS OF THE CASE:

Eligibility of ITC when invoice is not uploaded in GSTR-1 and GSTR-3B thus not reflecting in GSTR-2A but tax has already been paid through DRC-03

LAW APPLICABLE:

SECTION 16 OF CGST ACT

(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,''

a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;

[(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37;](wef 01.01.2022)

b) he has received the goods or services or both.-------------------------------------

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:

CGST RULE 36 (wef 09.10.2019)

(4) Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 5 per cent (10 percent till 21.12.2020) (20 per cent till 01.01.2020) of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.

CGST RULE 36 (wef 01.01.2022)
(4) No input tax credit shall be availed by a registered person in respect of invoices or debit notes the details of which are required to be furnished under subsection (1) of section 37 unless,-

(a) the details of such invoices or debit notes have been furnished by the supplier in the statement of outward supplies in FORM GSTR-1 or using the invoice furnishing facility; and
(b) the details of such invoices or debit notes have been communicated to the registered person in FORM GSTR-2B under sub-rule (7) of rule 60.

INTERPRETATION:

Earlier (till 01.01.2022) there was no provision which makes ITC not reflected in GSTR-2A as ineligible nor it is one of the mandatory conditions to avail ITC in terms of Section 16 of the CGST Act.

However wef 09.10.2019 Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers in GSTR-1 shall not exceed 5 per cent (10 percent till 21.12.2020) (20 per cent till 01.01.2020) of the eligible credit available.

Further wef 01.01.2022 with insertion of clause (aa) in Section 16 read with Rule 36(4), now ITC can be availed only when the invoice will be uploaded by supplier in GSTR-1 and the same will get reflected in GSTR-2B.

Since your case is related to March 2021, therefore as per Rule 36(4) for invoices not reflecting in GSTR-2A, ITC can be claimed 5% on provisional basis.

As per law, there is no provision for claiming ITC on the basis of DRC-03. But keeping in mind the principle of natural justice, ITC relating to supply on which Tax is paid through DRC-03 should be allowed through Litigation. However in the instant case, since the transaction is related to March 2021, therefore ITC of the same can be availed till due date of GSTR-3B of September 2021, thus it is time barred.

CONCLUSION:

Hence as per Rule 36(4) for invoices not reflecting in GSTR-2A, ITC can be claimed 5% on provisional basis but in the instant case ITC cannot be availed due to time barred. (Reply dt. 12/05/2022)