The AAR, Andhra Pradesh, in the matter of M/s. Vishnu Chemicals Limited, [AAR No.21/AP/GST/2021 dated July 20, 2021] has held that no Input Tax Credit ("ITC") on monthly rental tax invoices for the month from April 2018 to March 2019 raised dated April 1, 2020 i.e. after the expiry of the period of limitation.

1. Petitioner : Vishnu Chemicals Limited

2. Respondents : N.A.

3. Appeal Type/ No. : Advance Ruling Application dated 12.03.2021

4. CORAM : 1. SRI. D. RAMESH, Member, 2. SRI SRI. A. SYAM SUNDAR, Member

5. Representative For Petitioners : Sri M Narsi Reddy, DGM, Accounts

6. jurisdiction : Superintendent, CGST Parawada Range, Visakhapatnam South Division

7. Date of pronouncement : 20.07.2021

8. Facts : The applicant, M/s. Vishnu Chemicals Limited is engaged in manufacture of Basic Chromium Sulphate, Sodium Sulphate and Chromic Acid falling under HSN 28332990, 28331100 and 28191000. For the purpose 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) (referred to as "UTPL") for leasing of godowns situated at UTPL Campus, Mindi, Gajuwaka, Visakhapatnam.

The applicant 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. UTPL0919117KVC 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. The applicant has approached this authority seeking a ruling 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 applicant is of the view that the bar under Sec 16(4) is not applicable to the invoice under consideration for the following reasons:
The applicant is of the view that they are entitled to avail ITC on the invoice dated 01.04.2020 on or before filing the GSTR 3B for September 2021 or date of filing of Annual Return for financial year 2020-2021 whichever is earlier. In other words, restriction under Sec 16(4) is not applicable to the invoice dated 01.04.2020 issued in the instant case for renting / leasing services supplied in the year 2018-2019.

9. Nature of Issue : The applicant seeks advance ruling on the following:

(1) Whether the tax invoice dated 01.04.2020 issued by the supplier of service for the rental service supplied for the period 01.04.2018 to 31.03.2019 is hit by the limitation for claiming ITC under sub-section (4) of Section 16 of the CGST/SGST Act, 2017.

(2) If the applicant avails ITC on such invoice after 01.04.2020 and before filing GST return for September 2021/Annual Return for 2020-2021, whether it amounts to violation of condition stipulated under sub-section (4).

10. Industry : Not industry specific

11. Order : The issue at hand is whether the tax invoice dated 01.04.2020 issued by the supplier of service for the rental service supplied for the period 01.04.2018 to 31.03.2019 is hit by the limitation for claiming ITC under Section 16(4) of the CGST/SGST Act, 2017 or not.

In the instant case the 'tax invoice' is issued by the lessor on 01.04.2020 for the services supplied in the financial year 2018-2019. For any transaction, the tax invoice is the primary document evidencing the supply and vital for availing input tax credit. Now we look into the aspect of the 'issuance of tax invoice' as per the provisions of the Act.

"Section 31 (2) A registered person supplying taxable services shall, before or after the provision of service but within a prescribed period, issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be prescribed."

The Act prescribes certain conditions for the issuance of tax invoice in case of supply of services, among which Rule 47 prescribes the time limit for issuing of tax invoice.

"Rule 47. The invoice referred to in rule 46, in the case of the taxable supply of services, shall be issued within a period of thirty days from the date of the supply of services."

If we look into the present case, it is evident that the invoice has not been issued within the stipulated time as prescribed by the act.

The second part of the question is that whether the invoice mentioned above is hit by the limitation for claiming ITC under sub-section (4) of Section 16 of the CGST/SGST Act, 2017.

In the instant case, the invoice which was raised on 01.04.2020 does not pertain to that financial year of 2020-2021, but pertains to the financial year of 2018-2019 in which the services were received. Moreover, as per section 16(4) the applicant was mandated to claim input tax credit before the due date of furnishing of the return under section 39 for the month of September 2019 following the end of financial year 2018-2019 to which such invoice pertains or furnishing of the relevant annual return for the year 2018-2019, whichever is earlier. In such a context, we are of the opinion that the applicant is not entitled to take credit of input tax under section 16(4) as it does not fulfill the basic condition that the invoice should pertain to the financial year 2018-2019 where in the supplies are made and for which the tax invoices are supposed to be raised as prescribed by the act. Thus, Act necessitates the applicant to claim input tax credit as per the conditions prescribed under the act.

The AAR Andhra Pradesh, in the matter of AAR No.21lAP/GST/ 2O21 dated July 20, 2021,  held as under:

Question: Whether the tax invoice dated 01.04.2020 issued by the supplier of service for the rental service supplied for the period 01.04.2018 to 31.03.2019 is hit by the limitation 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).

Question: If the applicant avails ITC on such invoice after 01.04.2020 and before filing GST return for September 2021/Annual Return for 2020-2021, whether it amounts to violation of condition stipulated under sub-section (4).

Answer: Affirmative.

12. In favour of : Revenue
13. Case Law References : N.A.
14. Relevant Act/ Rules/ Forms :

15. Database Citation : AAR-GW-140-2021-AP