Uninterrupted and seamless flow of input tax credit (ITC) is one of the key features of the Goods and Services Tax (GST) law. It is a mechanist avoid cascading taxes. As per the provisions of GST Law, every registered person is eligible to claim ITC on the purchase of goods or services or both which are used or intended to be used in the course or furtherance of business. As per Section 16 of CGST ACT,2017, the following conditions are to be fulfilled before claiming an input tax credit under GST –
- The recipient must be in possession of the invoice/debit note issued by the registered supplier,
- The recipient must have received the goods/services,
- The GST charged must have been paid to the government by the supplier, either in cash or through the utilization of admissible ITC,
- Filling of return u/s 39 i.e, filling of GSTR-3B by the recipient,
- Also, the supplier must have uploaded the invoice details while filing GSTR-1 and the same must be reflected in GSTR-2B of the recipient.
NOTE: The hurdle under GST law for claiming ITC is that ITC is only allowed when the supplier has deposited the tax collected from the recipient with the government. So, the ITCthat the recipient is claiming must be matched and validated.
Now the question arises whether ITC can be availed when the registration of the supplier got cancelled retrospectively. To have a lucid understanding of this problem, let’s have a look at the below-mentioned case study.
BACKGROUND OF THE CASE
- Here the assesses, Sanchita Kundu was aggrieved by the action of the GST department which denied the benefit of the Input Tax Credit (ITC) on some purchases of the goods and asked the assessed to pay the penalty and interest under the provisions of the GST law. The penalty and interest were demanded on the ground that the registration of the suppliers in question has been cancelled with retrospective effect, covering the transaction period in question.
FACTS OF THE CASE
- The names of the suppliers were reflected on the government portal during the relevant period of transaction, which means they were registered at the time of transaction.
- The assessed had paid the number of purchases as well as the tax on it to the supplier.
- All the purchases made by the assessed were available on the GST portal in form GSTR-2B.
JUDGEMENT
- After all the verification and consideration of the relevant documents submitted by the assesses, it was found that all the purchases and transactions in question were genuine and supported by valid documents.
- Transactions in question were made before the cancellation of the registration of suppliers, and
- The payment of the purchase has also been made by the recipient to the supplier on time through the bank.
Therefore, ITC cannot be denied on the genuine transactions made from the suppliers whose registration has been cancelled retrospectively.
TAKE AWAY
To have a better understanding of the mentioned problem, suppose-
