Now You can claim ITC even after crossing time limit specified u/s 16(4): Notification No. 22/2024
The Central Government, in exercise of the powers conferred by Section 148 of the Central Goods and Services Tax (CGST) Act, 2017, has introduced a special procedure for rectification of orders pertaining to wrong availment of Input Tax Credit (ITC). This notification is targeted at a specific class of registered persons who have been issued an order under Section 73, 74, 107, or 108 of the Act confirming a demand for wrong ITC availment, primarily due to non-compliance with sub-section (4) of Section 16, but where such ITC is now available under sub-section (5) or (6) of Section 16.
Key Highlights of the Notification
1. Applicability
This special procedure is applicable to those registered taxpayers who have been issued orders under:
- Section 73 (dealing with demand and recovery of tax for non-fraudulent cases),
- Section 74 (for cases involving fraud or wilful misrepresentation),
- Section 107 (related to appeals),
- Section 108 (rectification of mistakes in orders).
The crux of this notification is for taxpayers who, earlier, were penalized for wrongful availment of ITC due to non-compliance with Section 16(4) but can now avail the said ITC under Section 16(5) or 16(6) of the CGST Act, 2017.
2. Filing of Rectification Application
The registered persons, referred to as “the said persons,” who meet the above conditions must:
- Electronically file an application for rectification on the GST common portal within six months from the date of issuance of this notification.
- Provide detailed information in the prescribed format as per Annexure A of this notification.
This rectification application must only pertain to the demand for wrongly availed ITC under Section 16(4) but is now eligible for availment under Section 16(5) or (6). Importantly, the taxpayer must ensure that no appeal against the order has been filed under Section 107 or Section 112 of the CGST Act.
3. Role of the Proper Officer
The officer responsible for rectifying the order will be the same officer who issued the original order. Once the application for rectification is received, the proper officer will:
- Review the rectification application and issue the rectified order within three months from the application date, to the extent possible.
- Upload a summary of the rectified order electronically:
- In FORM GST DRC-08 if the order was issued under Section 73 or 74.
- In FORM GST APL-04 if the order was issued under Section 107 or 108.
4. Natural Justice
If the rectification is likely to have adverse consequences for the taxpayer, the principles of natural justice will be followed, ensuring that the taxpayer is given an opportunity to present their case before any rectified order is passed.
Key Details Required in Annexure A
As part of the rectification application, taxpayers must submit detailed information in Annexure A. The proforma covers the following aspects:
- Basic Details of the taxpayer:
- GSTIN
- Legal Name
- Trade Name (if any)
- Reference Number and Date of the original order.
- Details of Demand confirmed in the order, including:
- Financial years for which the demand has been confirmed.
- Separate columns for IGST, CGST, SGST, CESS, interest, and penalties across different financial years.
- Details of Eligible ITC that is now available under sub-section (5) or (6) of Section 16 of the CGST Act.
- Declaration and Verification: The taxpayer must declare that no appeal is pending and that the information provided is accurate. Any suppression of facts or incorrect information could lead to voiding the application and recovery proceedings for outstanding dues along with applicable penalties and interest.
Conclusion
This notification provides much-needed relief for taxpayers who had wrongly availed ITC but are now eligible to claim it as per the amended provisions of Section 16 of the CGST Act. By providing a six-month window for rectification applications and ensuring quick resolution, the government aims to streamline the process for correcting such discrepancies.
Businesses that fall under this special procedure should take immediate steps to file their rectification applications within the stipulated time frame to ensure compliance and avoid unnecessary legal complications.
Implications for Businesses
- Timely Action: Businesses must act within six months to file their rectification applications; failure to do so may result in losing the benefit of the rectification process.
- Correct Information: Ensure that all information provided is accurate and truthful to avoid complications.
- Follow-Up with Authorities: While the notification states that rectified orders should be issued within three months, businesses should follow up with authorities to ensure timely resolution.
This notification serves as an important step toward simplifying compliance, especially in cases where genuine mistakes were made concerning the availment of input tax credit. Businesses should review their past orders and determine their eligibility for rectification under this special procedure.
