Page 35 - GSTL_13th August 2020_Vol 39_Part 2

2020 ] SUPPLY OF WOOD LOGS FOR PULPING — BOARD CIRCULAR IS BOON OR A BANE J43
Payment of differential amount of GST and entitlement of ITC
There are two options available with the taxpayers or traders to pay dif-
ferential amount of GST @ 13% for the past period, i.e., before the period of
Board circular. First option, the traders may protest for payment of differential
amount of GST in the plea of applicability of Board’s circular prospectively. Se-
cond option, the traders may pay differential amount of GST for the past period
and arrange recovery of the same from the paper manufacturer by raising revise
invoices or debit notes.
Even, if the department would proceed to recover differential amount of
GST from the traders, but it remains a revenue neutral situation as the traders
pay the differential amount of GST and pass on incidence of GST to the paper
industries by way of revised invoice or debit note and in turn paper industries
will be entitled to avail ITC on differential amount of GST. No extra amount of
GST will be generated as revenue for the Government.
With regard to entitlement of ITC by the paper industries against revised
invoices issued by the traders there is restriction under GST law. The eligibility
and time-limit for taking Input Tax Credit prescribed under Section 16(4) of the
CGST Act, 2017; the relevant portion is reproduced 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.”
As per the cited provision of time limit for taking ITC has been linked with filing of
GSTR-3B return for the month of September, i.e., last date is 20th October for the
preceding financial year. But the almost all paper manufacturers have already filed
GSTR-3B returns under Section 39 of the Act for the month of September for both
the financial year 2017-2018 & 2018-2019. Under this circumstances, if the suppli-
er/trader issues revised invoices for collection of differential amount of GST
against ‘wood logs’ supplied to them from the period July, 2017 to December, 2018,
ITC may not be available to the paper manufacturers against those invoices due to
time limit under Section 16(4) of the Act. Further there is no scope for them to
submit revised GSTR-3B returns under Section 39 of the Act.
Thus, the supplier/trader have to follow the procedure of payment of
differential amount of GST through FORM GST DRC-03 and issue debit notes to
paper manufacturer to regularize past transactions and books of account. Since
in this transaction huge amount of ITC involved for the period July, 2017 to De-
cember, 2018, the supplier should raise consolidated or single debit note for all
tax invoices against each financial year. So that paper industry, may be entitled
to avail ITC on the strength of debit note as per the amendment made in Section
16(4) of the Act vide Finance Act, 2020 to the effect that “the said restriction in re-
spect of debit note shall be considered from the year in which such debit note is issued and
not the year in which the invoice relating to such debit note was issued”.
In light of the above provision the paper industries would be entitled to
avail the benefit of ITC against debit notes raised by the suppliers provided the
said amendment of Finance Act, 2020 is notified by the Government retrospec-
tively.
Conclusion :
The Tariff Heading/Chapter Heading (4401) was adopted for ‘wood
GST LAW TIMES  13th August 2020  35