La CBIC emitió una aclaración detallada sobre la forma de solicitar el ITC bajo la Sección 16(5) o (6) de la Ley CGST de 2017

New Section 16(5) and (6) have been inserted in the CGST Act, 2017 through section 118 of the Finance (No. 2) Act, 2024 to extend the time limit to claim ITC in certain cases with retrospective effect. These sub-sections have been made effective from 1st July 2017. The CBIC has issued a detailed clarification on issues related to the implementation of Section 16(5) and (6) vide circular No. 237/31/2024-GST dated 15th October 2024.

This article discusses the issues clarified by the CBIC concerning Section 16(5) and (6)

Issues Clarified By CBIC Concerning Section 16(5) and (6)

1. Brief analysis of Provisions of Section 16(5) and (6)

General Provision for Claiming ITC:

• As per Section 16(4), ITC can be claimed until 30 November of the following financial year to which such invoice or debit note pertains or the date of filing of the Annual Return, whichever is earlier.

Section 16(5): Extended time limit for claiming ITC for FY 2017-18 to FY 2020-21 

• Section 16(5) specifies that Input tax credit for invoice or debit notes for the Financial Years 2017-18, 2018-19, 2019-20, and 2020-21 can be claimed in any return filed under section 39 up to 30 November 2021. 

Section 16(6): Extended date of claiming ITC where GST registration is canceled

• Where GST registration of a person is canceled and subsequently revoked and such person is entitled to claim ITC concerning an invoice or debit note under section 16(4) on the date of cancellation of registration then the registered person shall be entitled to claim ITC to such invoice by later of following dates:
  • Upto 30th November of the Financial year following the financial year to which such invoice or debit note pertains or date of filing of annual return, whichever is earlier; or
  • for the period from the date of cancellation of registration till the date of order of revocation, where such return is filed within 30 days from the date of order of revocation of cancellation of registration;

Section 150 of Finance Act, 2024

• As per Section 150 of the Finance Act, 2024, no refund of any tax paid or ITC reversed shall be granted on account of such retrospective insertion of Section 16(5) and (6) of the CGST Act

2. Amendment in Section 148 of CGST to handle Assessment orders

• Vide Notification No. 22/2024 – Central tax dated 8th October 2024, CBIC specified special procedure under section 148 where orders have been issued under sections 73 74 107, or 108 on account of ineligible ITC under section 16(4) of CGST Act. 
• However, such ITC is now allowed under section 16(5) or (6) of the CGST Act.

Read More: CBIC Issued Clarification on Admissibility of ITC concerning Demo Vehicles

3. clarification

CBIC received various representations to clarify various issues related to availing of the benefit of Section 16(5) and (6) of CGST Act, 2017 by the taxpayer against whom the demand is issued for wrong advancement of ITC under section 16(4) of CGST Act.

CBIC issued clarification concerning the following matters:

3.1 Where no demand notice/statement has been issued under section 73 or section 74 of the CGST Act

• Where investigation or proceedings in respect of wrongful availment of ITC under section 16(4) of CGST Act has been initiated but no demand notice or statement under section 73 or section 74 has been issued.
• Now the taxpayer is entitled to claim such ITC under Section 16(5) or Section 16(6) of the CGST Act.
• In such a case, the proper office shall take cognizance of Section 16(5) or 16(6) of the CGST Act inserted retrospectively with effect from 01.07.2017 and take further appropriate action. 
• The same shall apply in cases where Form DRC-01A has been issued but no demand notice/statement under section 73 or section 74 of the said Act has been issued.

3.2 Where demand notice or statement has been issued under section 73 or section 74 of CGST Act but no final order has been issued

• In such cases, the Adjudicating Authority shall take cognizance of the retrospective insertion of Sections 16(5) and 16(6) of the CGST Act with effect from 01.07.2017 and shall pass the appropriate order.

3.3 Where an order under section 73 or section 74 of the CGST Act has been issued an appeal has been filed against such order with the Appellate Authority but no order is issued by the Appellate Authority:

• In such cases, the Appellate Authority shall take cognizance of Section 16(5) or (6) of the CGST Act and shall issue the order accordingly.

3.4 Where an order under section 73 or section 74 of the CGST Act has been issued and Revisional Authority has initiated proceedings under section 108 of the CGST Act but no order is issued by the Revisional Authority:

• In such cases, the Revisional Authority shall take cognizance of Section 16(5) or (6) of the CGST Act and shall issue the order accordingly.

3.5 Where an order is issued under Section 73 or 74 of CGST Act but no appeal is filed against the same with the Appellate Authority or the Revisional Authority or Order is issued by the appellate authority or Revisional Authority but no appeal is filed against the same with Appellate Tribunal

• There may be a case, where an order is issued under Section 73 74 107, or 108 confirming demand on the ground of wrong availment of ITC under section 16(4) of CGST Act and such ITC is not available by Section 16(5) or 16(6) of CGST Act and no appeal is filed against such order.
• In such case, the concerned taxpayer may apply for rectification of such order by the special procedure defined under section 148 of CGST Act vide Notification No. 22/2024 – Central tax dated 08.10.2024, within 6 months from the date of issuance of the said notification.

4. Manner of filing of an application under Section 148 of CGST Act

1. Application against an order issued under section 73 or 74 of the CGST Act
   1. The application for rectification against an order issued under section 73 or 74 of the CGST Act can be filed post-login on the GST portal at the following path:

Dashboard > Services > User Services > My Applications.

2. Select "Application for rectification of order" in the Application Type field. 
3. Then, click the NEW APPLICATION button.

2. Application against an order issued under section 107 of the CGST Act
   1. The application can be filed post-login at the following path:

Dashboard > Services > User Services > View Additional Notices/Orders

2. Once the “Additional Notices and Orders” page is displayed, Click the View hyperlink to go to the Case Details screen of the issued Notice/Order.
3. On the case details page, The APPLICATIONS tab is selected by default. Select the ORDERS tab and click the "Initiate Rectification" link.

3. Application against an order issued under section 108 of the CGST Act:
   1. The application shall be filed at the following path:

Click Dashboard > Services > User Services > View Additional Notices/Orders

2. Additional Notices and Orders > Case Details Screen
3. The NOTICES tab is selected by default. 
4. To submit a Rectification Request against the Revision Order issued to you by the Revisional Authority, select the ORDERS tab and click the "Initiate Rectification" link.

4. The applicant shall furnish the details of ITC eligibility under Section 16(5) or 16(6) of the CGST Act in the format given in Section 148 along with the application.

5. Manner of handling application

• Dicha solicitud de rectificación será tramitada por el funcionario competente que dictó la orden para la cual se presenta la rectificación.
• Dicho funcionario deberá tomar una decisión y emitir la orden en un plazo de 3 meses a partir de la fecha de la solicitud.
• El funcionario competente deberá cargar el resumen de la orden rectificada electrónicamente en:
  • FORMULARIO DRC-08: cuando la orden original se emita bajo la sección 73 o la sección 74;
  • FORMULARIO GST APL-04: cuando la orden original se emita bajo la sección 107 o la sección 108 de la Ley CGST.

• Al procesar la solicitud de rectificación, el funcionario competente también considerará otros motivos, si los hubiera, para la denegación del ITC distintos a la Sección 16(4) de la Ley CGST invocada en la notificación emitida bajo la Sección 73 o la Sección 74.
• Cuando la rectificación afecte negativamente al contribuyente, el funcionario competente deberá seguir los principios de justicia natural.
• Se puede presentar un recurso contra la orden rectificada bajo la sección 107 o la sección 112 de la Ley CGST, según corresponda, dentro del plazo allí especificado.

6. Condición para presentar una solicitud de rectificación bajo la sección 148

• La circular ha aclarado que la solicitud bajo la sección 148 para la rectificación se presentará solo cuando el asunto, o uno de los asuntos a los que se refiere la demanda, sea por la obtención indebida de ITC bajo la Sección 16(4) de la Ley CGST y dicho ITC no esté permitido bajo la Sección 16(5) o (6) de la Ley CGST.
• Cuando no esté involucrado dicho asunto, el contribuyente deberá solicitar la rectificación únicamente bajo la sección 161 de la Ley CGST dentro del plazo allí especificado.
• Cuando la solicitud se presente bajo la sección 148 sin que exista ningún asunto de ITC permitido bajo la sección 16(5) o (6) de la Ley CGST, dicha solicitud será rechazada sumariamente por el funcionario competente con observaciones detalladas.

Conclusion

La aclaración sobre la forma de gestionar las notificaciones de demanda u órdenes donde se permite el ITC bajo la sección 16(5) o (6) era muy necesaria. Los contribuyentes y los funcionarios de GST tendrán claridad sobre cómo proceder y manejar dichas solicitudes de rectificación y los escenarios en los que no se pueden presentar tales solicitudes.