Section 16 (4): Will Delayed filing of return cost the availability of ITC to Defaulters?

Rovin Kothari | Last updated: 02 March 2024

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Quick Summary

Section 16(4) of the CGST Act, 2017, can lead to the disallowance of Input Tax Credit (ITC) if GST returns are filed late. This includes situations where GSTR 3B is filed after the deadline or ITC for a specific period is claimed beyond the stipulated time. The interpretation and application of this section have led to differing views among High Courts, with some rulings favouring taxpayers and others disallowing ITC. The matter is currently before the Supreme Court, and taxpayers are advised to file returns promptly to avoid litigation.

Section 16(4) of the CGST Act, 2017 sounds like a nightmare to taxpayers whose Input Tax Credit is disallowed by the Department. The significance of the Section had not been realised by the taxpayers till the time they started receiving notices from the Tax Authorities. The Department has been levyi

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FAQ :

Section 16(4) of the CGST Act, 2017, sets a time limit for registered persons to claim Input Tax Credit (ITC). Generally, ITC must be availed by the 30th of November following the end of the financial year to which the invoice pertains, or by the due date for furnishing the annual return, whichever is earlier.

Yes, if Form GSTR 3B is filed beyond the timeline stipulated under Section 16(4), the Input Tax Credit (ITC) claimed in that return can be disallowed.

If the supplier of goods or services files their return beyond the time limit given under Section 16(4), the recipient taxpayer may face disallowance of ITC for that specific invoice.

Yes, there have been numerous High Court judgments with diverse views. Some rulings have favoured allowing ITC even with late filings, while others have ruled against allowing ITC in such cases.

Yes, the matter is before the Supreme Court of India in cases like Shanti Motors v. Union of India & Ors. and Mrityunjay Kumar v. The Union of India & Ors.

Taxpayers are advised to file their GST returns and reconcile their Input Tax Credit register in a timely manner to avoid potential litigation and the lapse of ITC.