The Circular No. 237/31/2024-GST dated 15.10.2024 addresses clarifications regarding the implementation of sub-sections (5) and (6) in section 16 of the Central Goods and Services Tax (CGST) Act, 2017. These provisions were inserted retrospectively, effective from July 1, 2017, to extend the time limit for availing input tax credit (ITC) under certain conditions.
Key Provisions:
- Sub-sections (5) and (6) of Section 16 of CGST Act:
- Sub-section (5): Allows registered persons to avail input tax credit (ITC) retrospectively in respect of invoices or debit notes for the financial years 2017-18 to 2020-21, provided returns are filed up to November 30, 2021.
- Sub-section (6): Specifies that a person whose registration was canceled under section 29 and later revoked, may also claim ITC on relevant invoices or debit notes, subject to specific conditions.
2. No Refund Provision:
Section 150 of the Finance (No. 2) Act, 2024 states that no refund will be granted for any tax paid or input tax credit reversed due to the retrospective application of these provisions.
3. Special Procedure for Rectification:
A special rectification process has been established through Notification No. 22/2024-Central Tax, dated October 8, 2024. This procedure is for taxable persons who were subject to orders confirming wrong ITC availment under sections 73, 74, 107, or 108 of the CGST Act.
4. Representations and Clarifications:
The Circular provides actions for tax authorities and taxpayers to claim ITC benefits under the newly inserted provisions in various situations such as:
– No demand notice issued.
– Demand notice issued but no order passed.
– Orders passed, and appeals filed but no orders issued by appellate authorities.
5. Rectification Application:
Taxpayers can file applications for rectification of orders electronically through the GST portal using their credentials. A rectification can be requested if a demand for ITC contravention under sub-section (4) of Section 16 was confirmed but is now valid under sub-sections (5) or (6).
6. Additional Considerations:
Rectification must be made within six months from the date of notification. Tax authorities are instructed to process such rectifications within three months of application receipt.
FAQ
| Question | Answer |
| What is the time limit for availing ITC as per the new provisions? | ITC can be availed for invoices or debit notes pertaining to the financial years 2017-18 to 2020-21, provided the returns are filed up to November 30, 2021. |
| Can a taxpayer claim a refund of the tax paid or ITC reversed due to retrospective amendments? | No, section 150 of the Finance (No. 2) Act, 2024 explicitly prohibits any refund of tax paid or ITC reversed in connection with these retrospective amendments. |
| What is the process for rectifying an order issued under section 73 or 74 of the CGST Act? | Taxpayers can file an application for rectification electronically through the GST portal. The process involves selecting ‘Application for rectification of order.’ |
| What if no demand notice has been issued under sections 73 or 74 of the CGST Act? | The tax authorities will consider the retrospective provisions and take appropriate action, which includes addressing cases initiated but not resulting in a notice. |
| What action should be taken if an order has been issued but no appeal is filed? | Taxpayers can apply for rectification within six months from the date of the notification, using the special procedure established under section 148. |
| What happens if an order is rectified adversely? | In such cases, the principles of natural justice will be followed, and the taxpayer has the right to appeal against the rectified order under sections 107 or 112. |