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2020 ] GST SECTION 16(4) — TIME-LIMIT FOR AVAILMENT OF ITC — AN OVERVIEW J71

GST SECTION 16(4) — TIME-LIMIT FOR
AVAILMENT OF ITC — AN OVERVIEW
By
Ramesh Chandra Jena, B.A. (Hons.), M.A. (Eco.),
D.M.M., LL.B.
ADVOCATE & TAX CONSULTANT

One of the main purposes of implementation of
GST is to remove the cascading effect of indirect taxes by
facilitating a seamless flow of ITC. Section 16(1) of the
CGST Act, 2017, provides that every registered person shall, subject to such con-
ditions, restrictions and in the manner specified in Section 49 of the CGST Act, be
entitled to take credit of input tax charged on any supply of goods or services or
both to him which are used or intended to be used in the course or furtherance of
his business and the said amount shall be credited to the electronic credit ledger
of such person.
Further, Section 16(2) of the CGST Act, prescribes the eligibility condi-
tions for taking input tax credit and once the registered person satisfies the four
conditions specified therein, he is entitled to take credit in the electronic credit
ledger in respect of supply of goods or services or both.
Time Limit of taking ITC :
Section 16(4) of the CGST Act, 2017 prescribes the time-limit for taking
input tax credit. For ready reference an extract of the relevant provision is repro-
duced as under :
“16(4) A registered person shall not be entitled to take input tax credit in re-
spect of any invoice or debit note for supply of goods or services or both after
the due date of furnishing of the return under section 39 for the month of Sep-
tember following the end of financial year to which such invoice or invoice
relating to such debit note pertains or furnishing of the relevant annual re-
turn, whichever is earlier.”
The cited provision of Section 16(4) prescribed that a registered person cannot take
ITC in respect of invoice or a debit note pertaining to a financial year after the due
date for furnishing the return under Section 39 for the month of September from
the end of financial year or furnishing of Annual return, whichever is earlier.
It is pertinent to mention that the restriction under Section 16(4) original-
ly linked to GSTR-3, but the said return kept abeyance by the Government and
return means under Section 39 is GSTR-3B as per amendment made to Rule
61(5). Thus, for the financial year 2017-18 last date of taking credit against invoic-
es or debit notes was 20th October, 2018 i.e. filing of GSTR-3B return for the
month of September, 2018.
Further, as an exception for the financial year 2017-18 the Government
has taken considerable view being the first year of GST and extended cut-off date
of taking ITC. Accordingly, the Proviso to Section 16(4) has been inserted vide
CGST (Second Removal of Difficulties) Order No. 2/2018-C.T., dated 31-12-2018.
The said inserted proviso is reproduced as under :

GST LAW TIMES  18th June 2020  37