PIB on last date to claim ITC to be the due date of GSTR-3B held illegal by the HC

We wish to update you in respect of the recent ruling by the Hon’ble High Court of Gujarat, which relates to legality and validity of Para 3 of the Press Release dated 18 October 2018, which clarified that the last date to avail Input Tax Credit (ITC) in relation to invoices issued during the period July 2017 to March 2018.   

As per the press release, ITC in relation to invoices issued during the said period can be availed till the last date of filing Form GSTR-3B for September 2018, i.e., till 20 October 2018. The assessee challenged the same on the ground that the clarification is contrary to section 16(4) of Central Goods and Services Tax Act, 2017 (CGST Act), as return under section 39 of CGST Act is Form GSTR-3 and not Form GSTR-3B. Revenue argued that section 39(1) does not specify any name of the return to be filed but only provides the details contained in the return. Form GSTR-3B contains all such details and therefore, can be treated as a return under section 39.

The Hon’ble High Court , after taking into consideration the relevant provisions of CGST Act and Rules, held that para 3 of the impugned press release is contrary to section 16(4) read with section 39(1) of the CGST Act and Rule 61 of the CGST Rules. The Hon’ble HC also held that the impugned Para 3 could be said to be illegal to the extent it clarifies the last date to avail ITC for the period July 2017 to March 2018 as 20 October 2018.

Basis the HC’s ruling, if the return under section 39 is not Form GSTR-3B, then in terms of the proviso inserted under section 16(4) for the invoices pertaining to FY 2017-18, it may possibly mean that there is no last date to claim the ITC. The ruling may prove beneficial to taxpayers who have not claimed ITC on invoices pertaining to FY 2017-18 till 20 April 2019, being the due date for filing Form GSTR-3B for March 2019.

We have attached a copy of the judgement with this email, for your reference. We have also attached the EY update summarizing contentions of both the assessee and the Revenue, and observations of the Hon’ble High Court, for your reference.

Additionally, also note that a similar writ petition filed by M/s Bharti Telemedia Ltd has been admitted by the Delhi High Court and notice has been issued to the Union of India by the Court in relation to validity of denial of ITC in the hands of recipient for the defaults made by supplier under GST law. The same is pending for hearing in the month of September 2019.