The Appellate Authority upheld the Advance Ruling denying input tax credit to the appellant for a tax invoice issued in FY 2020-21 covering rental services supplied in FY 2018-19, holding that the invoice pertains to the supply date.
No relief granted; appeal dismissed confirming the earlier Advance Ruling.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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BEFORE THE APPELLATE AUTHORITY FOR ADVANCE RULING for the State of Andhra Pradesh (Goods and Service Tax)
(Office at O/o Chief Commissioner of State Tax, Govt. of A, P., D NO 5-56, Block-8, R.K.Spring Valley Apartment, Bunder Road, Edupugallu, Vijayawada,
Andhra Pradesh - 521151)
Present:
Sri Suresh Kishnani (Member) (Central Tax)
Sri S. Ravi Shankar Narayan (Member) (State Tax)
The 24'h day of )anuary, 2022 order /AAAR/AP/05 ssr ) / 2022
l'1ls. Vishnu Chemicals Limited, Plot No 29, JN Pharma 29, JN Pharma JN Pharma City, IOCL Roa d V i9!tf Cpc! i9!tf Cpc! Cpc! ! s sm:531q1e. 37AACCV19O3A3ZU 08.11.202137AACCV19O3A3ZU
Name and address of the Plot No 29, JN Pharma 29, JN Pharma JN Pharma City, IOCL -appellant V i9!tf Cpc! i9!tf Cpc! Cpc! ! s sm:531q1e. 2j GSTINDate of flling of Form 08.11.202137AACCV19O3A3ZU ARA--02 4 Hearing ( Virtual) 14.12.2021 5 Authorized Representative Sri M Narsi Reddy, DG14, Accounts 6 Jurisdictional Authority Superintendent, Parawada Range, Centre Visakhapatna m Sout! Qlvlqion.
(Under Section 1O1 of the Central Goods and Service Tax Act and the Andhra Pradesh Goods and Service Tax Act).
At the outset, we would like to make it clear that the provisions of both the CGST Act and the APGST Act are the same except for certain provisions. Therefore, unless a mention is specafically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the APGST Act,
Thepresent appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Andhra Pradesh Goods and Services Tax Act, 2017 lhereinafterreferred to as "the CGSTAct and APGST Act"lby l4/s. VishnuChemicals Ltd (herein after referred to as the "Appellant") against the Advance Ruling No. AAR No.21IAP/GST/2021 dated 20.O7.2021 issued by Authority for Advance Ruling, Andhra Pradesh.
1.1 The appellant , l4ls. Vishnu Chemicals Limited is engaged in manufacture of Basic Chromium Sulphate, Sodium Sulphate and Chromic Acid falling under HSN 28332990,28331100 and 28191000. Forthepurpose of storing the raw material as well as finished goods, the applicant needed some additional storage space and therefore, entered into lease agreements with M/s. Usha Tubes and Pipes Pvt, Ltd., Visakhapatnam (GSTIN:37AAACU7175R1ZG) (referredto as "UTPL") for leasing of godowns situated at UTPL Campus, N4indi, Gajuwaka, Visakhapatnam.
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1.2 The appellant submitted that monthly rental bills were received from M/s UTPL regularly till March 2018. But for the months from April 2018 to March 2019, M/s UTPL issued a single tax invoice bearing No. UTPLo919117KVC dated 01.04.2020 mentioning in the description as Rental charges for the months from April 2018 to March 2019 by showing rent month-wise for 12 months. The invoice mentioned CGST as 26,64,090/- and SGST of Rs. 26,64,090/- on total taxable value of Rs. 2,96,01,000.
1.3 The appellant had approached the Authority for Advance Ruling seeking a clarification whether the invoice dated 01.04.2020 is eligible for input tax credit if claimed before filing GST return for September 2021 or Annual return for 20-21 in terms of Sec 16(4). The Authority for Advance Ruling Andhra Pradesh in its orders in AAR no.21 / AP IGS'l l2O2L OI.2O.O7.2O2t ruled as under:
Question1: Whetherthe tax invoice dated O1,O4.2020issued by the supplier of service for the rental service supplied for theperiod 01.04.2018 to 31,03.2019 is hit by the limatation for claiming ITC under Section 16(4) of the CGST/SGST Act, 2017.
Answer: The invoice referred pertains to the services rendered in the financial year 2018-2019 and hence it is 'hit by the limitation for claiming ITC' under Section 16(4).
Question2: If the applicant ava ls ITC on such invoice after 01.04.2020 and before flling GST return for September 202l/Annual Return for 2020-2021, whether it amounts to violation of condition stipulatcd under sub section(4). Answer:Affirmative.
Aggrieved by the above ruling, the appellant has filed the present appeal on thc following grounds.
2. crounds of Appeall
The appellant states that the ruling of AAR is not legal and proper and it is based on the erroneous interpretation of the provisions of Sec 16(4) of the CGST/APGST Act, 2017. The detailed grounds are as follows;
2.1The AAR had held in its ruling as under:
"The provisions of section 31(2) read with Rule 47, prescribe a time limit for issue of invoice, Asper Rule 47, tax invoice an case of supply of service shall be issued within a period of 30 days from the date of services, Since in this case, invoice was not issued within the prescribed time limit, the appellant is not eligible for credit."
In this regard, the appellant submits that there is no condition under Sec 16 that only invoices issued within the due date a per sec 31(2) read with Rule 47 of the CGST/APGST Rules, 2017 are eligible for credit. Going by the Ruling if any supplier issues invoice on 31't day of the supply of service, such invoice is not
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eligible for credit. This is not mandated in sec 16 as erroneously held by the Ld. AAR. If there is any delay in issuance of invoice by the supplier, action for such violation lies with the supplier'sjurisdiction by way of collecting interest for delayed payment of tax or imposing penalty for violation of theprovisions of Sec 31(2) read with Rule 47, Delayed issuance of invoice cannot be a ground to deny the credit to the buyer.
2.2 Another ground taken by the Ld. AAR is that the invoice dated 01.04.2020 issued by the supplier "does notpertain to the Financialyear 2020-21", but pertains to Financial year 2018-19 and hence not eligible for credit. In this regard, the appellant submit that restriction under sec 16(4) is not for the "supplies made during a Financial Year", but only documents issued during the Financial year.
For example, if supplies are made in FY 2018-19 and due toprice escalation, if a debit note is issued in the month of October 2OL9, for supplies made in FY 18-19, then limitation under Sec 16(4) in respect of such debat note for claiming ITC would be Sept 2020, but not Sept 2019(based on original supply date).
2,3 The appellant further submits that CBIC has issued a clarification on 20.Og.2021 on interpretation of the provisions of Sec 15(4) vide Circular No.15O/ 16/ 202r-GST, with the following illustration:
"Illustration 2. A debit note has been issued on 10.11.2020 in respect of an invoice dated 15.07.2019. Asper amendedprovision of section 16(4), the relevant financial year for availment of input tax credit on the said debit note, on or after 01.01,2021, will be FY 2020-21 and accordinqly, the registered person can avail lTC on the same till due date of furnishing of FORM GSTR-38 for the month of September, 2021 or furnishing of the annual return forFy 2020-27, whichever is earlier."
From the above illustration, the following emerges:
Thus, it is clear that for the supplies made in the Financial Year2019-20, credit can be availed by due date of furnishing the GSTR 38 for the month ofSeptember 2021. In other words, thephrase "following the end of financialyear towhich such invoice or debit notepertains" used in Sec 16(4)qualify onlythe documents" issued in a financialyear, rather than "suppliesmade"in a financial year.
2.4 Hence, in the instant case, the supply of seTvice wasin theyear 2018 19, invoice was issued in theyear 2O2O-21and the last datefor claiming creditwouldbe the due date of filing GSTR 38 for the month of September2021.
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2.5 Hence, the appellant claims that the interpretation of the provisions of Section 16(a) by the LD. AAR is not correct and requests this authority to set aside the ruling and pass appropriate orders.
3. Virtual Hearing:
The Proceedings of Hearing were conducted through video conference on 14.12.2021. The authorized representative Sri. M. Narsi Reddy, DGN4 Accounts and Taxation, attended and reiterated the submissions already made.
4 Discussion and Findings:
4.1 We have gone through the facts of the case and entire submissions made by the appellant and the Ruling pronounced by the Authority for Advance Ruling as well. In light of the diametrically opposite interpretations made by both the appellant and the lower authority, we discuss the eligibility of the invoice dated 01.04.2020 for calming input tax credit, if claimed before filing GST return for September 2021 or Annual return for 20-21 in terms of Sec 16(4).
4.2 The main subject of contention is the issuance of a tax invoice dated l.O4.2O2O for monthly rental services extended from April 2018 to March 2019 and its eligibility thereon to claim input tax credit under Sec,16(4).
4.3 The AAR while passing the Ruling, recorded the findings pertaining to the statute with reference to 'the issuance of invoice as per Section 31 read with Rule 47'and then found that the invoice dated 01.04.2020, in question, does not pertain to the financial yeat 2O2O-21 as the services supplied vide the invoice question pertains to the financial year 2018-19 in which the services weTe rendered.
4.4 In this connection it is to bring on record that every Invoice will have two principal aspects which are,
In general conditions, both are same. However, in the instant issue, it appears that, both are not same. The 'Supply of Service' here is'Renting of immovable property'. The supplier of service issued a tax Invoice dated 01,04.2020 covering the period from 01.04.2018 to 31.03.2019. Therefore the supply of service pertains to the financial year 2018-19. The date on which the invoice issued was Ol,O4.2O2O and hence appears that the invoice issued pertains to the financial year 2O2O-27, However, the date of invoice or the period to which an invoice pertains will be determined only by the period of supply covering which the said invoice was issued, Therefore, in the instant case, irrespective of the date of Invoice (which is leading to mis-interpretation of the period of Invoice),
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the same ispertaininq to theperiod ofsupply coveredby the said invoicei.e. 2018- 19.
4.5 While defending the case, in Para 2.1, the appellant claims that 'delayed issuance of invoice' cannot be a ground to deny the credit to the buyer. But itas definitely aground to claim input tax credit only on the'documents' thatare validated by the Act and in the'conditions'prescribed by the Act. Inpara 2.2, the appellant draws an analogy with reference to'debit note',whereasthe currentissue pertains to 'invoice', which is out of context. Similarly even inpara no 3, the referenced Circular alsopertains to the issue of Debit note, which is rather irrelevant to the issue at hand.
4.6 As far as eligibility for availing of ITC is concerned, asper Section16(4) of CGST Act, 2017, which reads as under;
"(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply ofgoods or services or both afterthe due date of furnishing of the return under section 39 for the month ofSeptember followino the end of financia ilEor
furnishing of the relevant annual, whichever is earlier.
[Providedthat the registered person shall be entitledto take input tax credit after the due date of furnishing of the return under section 39 for themonth of September, 2018 till the due date of furnishing of the return underthesaid section for the month of March, 2019 in respect of anv invoice orinvoice relatinoto such debit note for supplv of ooods or services or bothmade duringthe financial year 2077-78. the details of which have been uploadedby thesupplier under sub-section(1) of section 37 till the due datefor furnishing the details under sub-section( 1) of said section for the month ofMarch,2119.l"
4.7 In the instant case, as the invoicepertains to thefinancialyear 2018-19, vide Secfidrl'16(4-),',the ftEDtent is entitled to takeITC onan the same before furnishini o'f ReturnnuntbL'dection 39 for the month ofSeptember,2019 i . ,u .l .'o; following the end of financiaiyear 2018-19 to which suchinvoice pertains or furnishing of the relevant annual return for theyear 2018-19,whicheveris earlier.
4.8 Even theproviso to section 16 (4) reiterates that theregistered personis entitled to take ITC in respect of any invoice or invoicerelating to such debit note for supply ofgoods or services or both madeduring the financial year 2017-18. Thisproviso absolutelynecessitatesor rather endorses the invoices relating to supplies made duringthe financialyear 2017- 18 only, for the registered dealer to claim entitlement ofITC in the succeeding financial year.
4.9 The availment of input tax creditis subject tosatisfying certainconditions prescribed in the statute. It is supported time and again, evenby the Courts of Law in various issues. For instance,
In Jayam and Company versus Assistant Commissioner andAnother, (2016)15SCC 125, the Hon'ble Supreme Court had held that,
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"11. From the aforesaid scheme of Section 19 fo owing significant aspects emerge:
(a) ITC is a form of concession provided by the legislature. It is not admissible to all kinds of sales and certain specified sales are specifically excluded. (b) Concession of IfC is available on certain conditions mentioned in this section.
(c) One of the most important condition is that in order to enable the dealer to claim ITC it has to produce original tax invoice, completed in all respect, evidencing the amount of input tax."
The Supreme Court further held that
It is a trite law that whenever concession is given by statute or notification, etc, the conditions thereof are to be strictly complied with in order to avail such concession. Thus, it is not the right of the "dealers" to get the benefit of ITC but it is a concession granted by virtue of Section.
Emphasis Supplied,,
In light of the above, we uphold the decision of the lower Authority, while dismissing the plea of the appellant for the reasons explained supra. It is our considered view that the appellant is not eligible to claim Input Tax Credit on the disputed anvoice dated 01.04.2020 that was issued covering the supply of services pertaining to the period from 01.04.2018 to 31.03.2019.
ORDER
We confirm and uphold the ruling of the AAR.
Sd/-Suresh Kishnani
Chief Commissioner (Central Tax)
N'lem ber
Sd/- S. Ravi Shankar Narayan Chief Commissioner (State Tax) lvlember
Deoutv Corn missroner fsT) DE,UTY coMMrsstoNEl(sn A Or.CnralCammissianar al St.ta f't, To P/G.r.tnrn.nt.tt.? vri.Y.w."
Copy to
Copy submitted to
2, The Chief Commissioner (Central Tax), O/o Chief Commissioner of Central Tax & Customs, Visakhapatnam Zone, GST Bhavan, Port area, Visakhapatnam- 530035.A. P. (By Regist€red Post).
3 issues framed by the court
Whether an input tax credit can be claimed on a tax invoice issued in FY 2020-21 but pertaining to rental services supplied during FY 2018-19 under Section 16(4) of the CGST Act.
Whether the phrase 'following the end of financial year to which such invoice or debit note pertains' in Section 16(4) refers to the financial year of the supply or the financial year of the invoice i
Whether delayed issuance of a tax invoice is a valid ground to deny input tax credit under the GST regime.
Colour shows how this judgement treated each authority
Jayam and Company versus Assistant Commissioner and AnotherReferred¶64
Jayam and Company versus Assistant Commissioner and Another, (2016)15SCC 125
2 provisions across 2 enactments
M/s. Vishnu Chemicals Limited
M/s. Usha Tubes and Pipes Pvt. Ltd.
Suresh Kishnani
S. Ravi Shankar Narayan
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
