18 December 2018
Gujarat High Court accepts application challenging the last day of availing ITC for invoices pertaining to July 2017 to March 2018

Background
The government vide press release dated 18 October 2018 had clarified that the last date for availing Input Tax Credit (ITC) in respect of invoices or debit notes relating to the period of July 2017 to March 2018 would be the last date for filing of GSTR-3B for the month of September 2018, i.e., 20 October 2018. (The due date of GSTR-3B for September 2018 was later extended to 25 October 2018.) This press release was challenged before the Gujarat High Court on the ground that the due date for return in form GSTR-3B cannot be considered as the last date for availing ITC, as GSTR-3B has not replaced the GSTR-3 return.
 
Applicant’s Contention
The applicant has challenged the validity of the said press release on the following grounds:
  • Notification No. 10/2017 - Central Tax, dated 28 June 2017, notified Rule 61(5), which introduced GSTR-3B stated that it should be filed in lieu of GSTR-3. Later the government, realizing its mistake, amended the said rule by deleting the phrase “in lieu of FORM GSTR-3”. Thus, GSTR-3B is not in lieu of GSTR-3 and is applicable only under the circumstances stipulated under Rule 61(5).
  • The CGST Act contemplates restricting entitlement of ITC after the due date of furnishing of return under section 39 which is in GSTR-3, whereas GSTR-3B is to be furnished in the circumstances, as contemplated under Rule 61(5). Thus, the impugned press release is contrary to the provisions of the Act and the rules as the due date for GSTR-3B cannot be considered at par with that of GSTR-3.
SKP's Comments

The applicant has adopted a very technical approach in analyzing the due date of availing ITC. From a plain reading of the Act, it appears that the intention of the legislature is to restrict the time limit for availing ITC upto the due date of furnishing of return of September of the following year, regardless of whether the said return is GSTR-3 or GSTR-3B. It would be interesting to see the government’s counter-submissions in the next hearing scheduled for 9 January 2019. If the court accepts the contentions of the applicant, there is a possibility that the due date for availing ITC can be extended up to the date of filing of annual return, i.e., 31 March 2019.
 
Many taxpayers have already written off the unavailed ITC in relation to the preceding financial year in their books of accounts. Any re-availment of such written off ITC in view of the judgment in this case should be carefully evaluated to determine implications under direct tax laws as well.
 
It should be noted that the court has not passed any order or provided any interim relief to the businesses. Taxpayers are well-advised to not rely on the messages circulating on various social media platforms, suggesting that the court has struck down the time limit for claiming ITC in respect of the period July 2017 to March 2018.
SKP
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