Input Tax Credit visa vis Circular No.183/15/2022GST dated 27122022CA. L. Venkataramanan

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The Tax Publishers GST--Input Tax Credit Input Tax Credit vis-a vis Circular No.183/15/2022-GST dated 27-12-2022 CA. L. Venkataramanan The Learned author seeks to discuss an issue relating to Input Tax credit with special reference to recently issued Circular No.183/15/2022-GST dtd. 27-12-2022 for the financial years 2017-18 and 2018-19. 1. Introduction Input Tax Credit (ITC) is the core concept of GST as GST is destination based tax. ITC avoids cascading effect of taxes and ensures that tax is collected in the State in which goods or services or both are consumed. Input tax credit is in the nature of benefit extended to dealer under the statutory scheme. The concession can be received by beneficiary only as per the scheme of statute-ALDAutomotive (P) Ltd., v. CTO (2018) 70 GST 751. Before enjoying rights to take input credit the registered person has to comply with the conditions prescribed in the Statute to take such credit. 2. Eligibility and conditions for taking input tax credit (Section 16 and Rule 36(4) Section 16 of the CGST Act and Rule 36(4) of the CGST Rules prescribe the various conditions for eligibility to take input tax credit, even though the registered person has right to take input tax credit. He enjoys such right subject to conditions prescribed in the Act. Similarly, as per section 155 of CGST Act, the burden of proving such claim shall lie on such registered person. He has responsibility to prove that the conditions mentioned in GST Act and Rules have been properly complied with. The above conditions depend on the registered person receiving the goods and services, some depends on the person supplying goods and services and some depends on Government. 3. Conditions for taking input tax credit vis-a-vis activities of purchaser(consignee) of goods or services. Purchases of goods or services are as under (i) The receiver of goods or services should be registered under the GST Act before taking input credit. [(Section 16(1))] (ii) The receiver is in possession of a tax invoice or debit note or other documents issued by supplier of goods or services [(Section 16(2)(a))] (iii) The registered person (receiver) has received the goods or services or both [(Section 16(2)(b))] (iv) The registered person has furnished the return under section 39 [(Section 16(2)(d)] (v) The recipient should pay to the supplier within a period of one hundred and eighty days from the date of issue of invoice. (Section 16(2)(d) second proviso. 4. Conditions for taking input tax credit vis--vis activities of supplier (consignor) of goods or services by supplier of goods or Services are as under (i) The tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply the conditions for taking Cenvat credit vis--vis activities performed by [(Section 16(2)(c)]. Even though the receiver paid the tax to the supplier, the same has to be in turn deposited to the Government. (ii) The details of the invoice or debit note referred to in clause (a) of section 16(2) has been furnished by the supplier in the statement of outward supplies (GSTR-1) and such details have been communicated (GSTR-2B) to the recipient of such invoice or debit note in the manner specified under section 37. [Section 16(2)(aa) inserted by Finance Act 2021, effective from 01-1-2022] (iii) As per Rule 36(4) (a) of the CGST Rules, the details of such invoices or debit notes have been furnished by the supplier in the statement of outward supplies in GORM GSTR-1 or using the invoice furnishing facility. [01-1-2022 Notification No.40/2021-Central Tax dt.29-12-2021] SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

GST--Input Tax Credit

Input Tax Credit vis-a vis Circular No.183/15/2022-GST dated 27-12-2022

CA. L. Venkataramanan

The Learned author seeks to discuss an issue relating to Input Tax credit with special reference to recently issued Circular No.183/15/2022-GST dtd. 27-12-2022 for the financial years 2017-18 and 2018-19.

1. Introduction

Input Tax Credit (ITC) is the core concept of GST as GST is destination based tax. ITC avoids cascading effect of taxes and ensures that tax is collected in the State in which goods or services or both are consumed. Input tax credit is in the nature of benefit extended to dealer under the statutory scheme. The concession can be received by beneficiary only as per the scheme of statute-ALDAutomotive (P) Ltd., v. CTO (2018) 70 GST 751. Before enjoying rights to take input credit the registered person has to comply with the conditions prescribed in the Statute to take such credit.

2. Eligibility and conditions for taking input tax credit (Section 16 and Rule 36(4)

Section 16 of the CGST Act and Rule 36(4) of the CGST Rules prescribe the various conditions for eligibility to take input tax credit, even though the registered person has right to take input tax credit. He enjoys such right subject to conditions prescribed in the Act. Similarly, as per section 155 of CGST Act, the burden of proving such claim shall lie on such registered person. He has responsibility to prove that the conditions mentioned in GST Act and Rules have been properly complied with. The above conditions depend on the registered person receiving the goods and services, some depends on the person supplying goods and services and some depends on Government.

3. Conditions for taking input tax credit vis-a-vis activities of purchaser(consignee) of goods or services. Purchases of goods or services are as under

(i) The receiver of goods or services should be registered under the GST Act before taking input credit. [(Section 16(1))]

(ii) The receiver is in possession of a tax invoice or debit note or other documents issued by supplier of goods or services [(Section 16(2)(a))]

(iii) The registered person (receiver) has received the goods or services or both [(Section 16(2)(b))]

(iv) The registered person has furnished the return under section 39 [(Section 16(2)(d)]

(v) The recipient should pay to the supplier within a period of one hundred and eighty days from the date of issue of invoice. (Section 16(2)(d) second proviso.

4. Conditions for taking input tax credit vis--vis activities of supplier (consignor) of goods or services by supplier of goods or Services are as under

(i) The tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply the conditions for taking Cenvat credit vis--vis activities performed by [(Section 16(2)(c)]. Even though the receiver paid the tax to the supplier, the same has to be in turn deposited to the Government.

(ii) The details of the invoice or debit note referred to in clause (a) of section 16(2) has been furnished by the supplier in the statement of outward supplies (GSTR-1) and such details have been communicated (GSTR-2B) to the recipient of such invoice or debit note in the manner specified under section 37. [Section 16(2)(aa) inserted by Finance Act 2021, effective from 01-1-2022]

(iii) As per Rule 36(4) (a) of the CGST Rules, the details of such invoices or debit notes have been furnished by the supplier in the statement of outward supplies in GORM GSTR-1 or using the invoice furnishing facility. [01-1-2022 Notification No.40/2021-Central Tax dt.29-12-2021]