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Impact of recent High Court ruling on last date to claim Input Tax Credit for 2017-18


Is August 20, 2019 the last day to avail Input Tax Credit pertaining to Financial Year 2017-18?

One of the major objectives for implementation of Goods and Services Tax (GST) was to provide a seamless credit of taxes paid, so as to avoid cascading effect of taxes. It was also felt that though the Input Tax Credit (ITC) should be provided seamlessly but adequate restrictions and conditions should also be imposed to avoid any superfluous availment of ITC. 

One such condition has been imposed under section 16(4) of CGST Act, 2017, which states that the last date for taking the input tax credit in respect of any invoice or debit note pertaining to a financial year is the due date of furnishing of the return under Section 39 for the month of September following the end of the financial year or furnishing of the relevant annual return, whichever is earlier.

A Press Release was issued on 18.10.2018 which stated that the last date for claiming such credit was filing of return for the month of September 2018, i.e., October 20, 2018 and the due date of filing annual return for financial year 2017-18 was December 31, 2018.

Thereafter, the time limit for claiming ITC was extended till March 2019 return1, i.e., April 20, 2019, which was again extended to April 23, 2019. Moreover, the time limit for filing Annual Return for 2017-18 was extended till August 31, 20192 . Therefore, effectively the last date to claim ITC for the year 2017-18 was April 23, 2019.

A Writ Petition was filed under Article 226 by AAP and Co, Chartered Accountants before the Hon’ble Gujarat High Court, wherein it was prayed that the Press Release issued dated 18.10.2018 is invalid and the time limit to claim ITC has not yet expired. 

It was argued that the time limit as specified in Section 16(4) is linked to Section 39 of CGST Act, 2017 and “GSTR – 3B” cannot be considered as a return to be filed under Section 39 of CGST Act, 2017. The return as specified under Section 39 is “GSTR – 3” and not “GSTR – 3B”, the time limit for such returns have been deferred till date and not been notified.

The High Court of Gujarat held that “GSTR – 3B” cannot be considered as a return as envisaged under Section 39 of the CGST Act, 2019 and therefore, the due date for claiming ITC in terms of returns filed under Section 39 is not yet expired.

One may also need to bear in mind that there are two timelines provided in Section 16(4) for claim of ITC:

  • the date of filing of return under Section 39
  • the date of annual return filed for the relevant year

As already mentioned above, the due date for filing Annual return has been extended till August 31, 2019 which gets triggered by the end of this month. It may therefore be essential to claim ITC before filing of Annual Return if businesses go by the position taken by Gujarat High Court. 

It may also be relevant to highlight the press release issued on July 3, 2019 with respect to Annual Return and GST Audit, wherein it has been categorically stated that no ITC can be claimed or reversed in Annual return filed in “GSTR – 9”. Essentially it would mean that ITC needs to be claimed only in “GSTR – 3B” to be filed before filing of Annual Return.

To conclude, if the decision of Gujarat High Court has been taken into consideration and the due date for filing Annual Return has not been further extended, the ITC pertaining to July 2017 to March 2018 may be availed before filing of “GSTR – 3B” for July 2019, i.e., by August 20, 2019.

1 Order No 02/2019 – dated 31.12.2018
2 Order No. 6/2019 - Central Tax dated 28.06.2019

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Avalara Author
Keval Shah
Avalara Author Keval Shah
Keval Shah is the Founder Partner of ConsultingEdge and has a handy experience of more than ten years into indirect taxes. Keval is presently the Convener of Indirect Tax Committee of Chamber of Tax Consultants. He has authored a book on GST Impact on Construction Industry published by “GST Practitioners Association of Maharashtra”. He regularly speaks at forums like ICAI, Chamber of Tax Consultants, BCAS and is a visiting faculty at Indo-German Training Centre.