Availment of ITC, Furnishing of Returns under section 37, 39, 52 of the CGST Act 2017, Issuance of Debit Notes / credit note, Rectification of any omission or incorrect particulars within a prescribed time limit are the essence of GST laws.

The Union Budget 2022 has proposed to bring in a few amendments in the GST laws which define the new time limit of availing the ITC by the recipient or for rectification of any omission or incorrect particulars in the specified returns as discussed hereafter.

Provision for time limits for availing credits
As per the Existing provisions, input tax credit in respect of any invoice or debit note for supply of goods or services or both received by the taxpayer is available subject to the conditions laid down under Section 16(4). As per this condition, A registered person shall not be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Clause 99(b) of the Finance Bill, 2022 proposes that a registered person shall not be entitled to take input tax credit in respect of any invoice or debit note after the thirtieth day of November following the end of the financial year to which such invoice or debit note pertains, or furnishing of the relevant annual return, whichever is earlier, by amending Section 16(4) of the CGST Act, 2017.

Provision for time limits for issuance of credit note
As per the existing provisions, Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than September following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed.

Clause 101 of the Finance Bill, 2022 proposes for thirtieth day of November following the end of the financial year, or the date of furnishing of the relevant annual return, whichever is earlier, as the last date for issuance of credit notes in respect of any supply made in a financial year.

Provision for time limits for rectification of error or omission of details of outward supplies
As per the existing provisions, no rectification of error or omission in respect of the details furnished under sub- section (1) of section 37 shall be allowed after furnishing of the return under section 39 for the month of September following the end of the financial year to which such details pertain, or furnishing of the relevant annual return, whichever is earlier.

Clause 102(c)(ii) of the Finance Bill, 2022 proposes for an extended time upto 30th November of the subsequent year for rectification of error or omission in respect of the details furnished under sub- section (1) of section 37, by amending Section 37(3) of the CGST Act, 2017.

Provision for time limits for rectification of error or omission in the returns GSTR 3B
As per the existing proviso to section 39(9) of CGST Act 2017, no such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of return for the month of September or second quarter following the end of the financial year to which such details pertain, or the actual date of furnishing of relevant annual return, whichever is earlier.

Clause 104 of the Finance Bill, 2022 proposes to amend the proviso to section 39(9) so as to provide for thirtieth day of November following the end of the financial year, or the date of furnishing of the relevant annual return, whichever is earlier, as the last date for the rectification of errors in the return furnished under section 39.

Provision for time limits for rectification of error or omission in the returns GSTR 8
As per the existing proviso to section 52(6) of CGST Act 2017, no such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of statement for the month of September following the end of the financial year or the actual date of furnishing of the relevant annual statement, whichever is earlier.

Clause 111 of the Finance Bill, 2022 proposes to amend proviso to sub-section (6) of section 52 of the Central Goods and Services Tax Act so as to provide for thirtieth day of November following the end of the financial year, or the date of furnishing of the relevant annual return, whichever is earlier, as the last date upto which the rectification of errors shall be allowed in the statement furnished under sub-section (4).

Analysis
All the above proposed amendment indicate that a taxpayer will henceforth be entitled to claim ITC till thirtieth day of November following the end of the financial year to which such invoice or debit note pertains, or furnishing of the relevant annual return, whichever is earlier.

Also that Finance Bill, 2022 proposes for thirtieth day of November following the end of the financial year, or the date of furnishing of the relevant annual return, whichever is earlier, as the last date for issuance of credit notes in respect of any supply made in a financial year.

Also that time limits for rectification of error or omission in the returns i.e. GSTR 3B, GSTR 1 and GSTR 8 has been extended to thirtieth day of November following the end of the financial year, or the date of furnishing of the relevant annual return, whichever is earlier, as the last date upto which the rectification of errors shall be allowed.

Issue
The real issue lies in the correct interpretation of the proposed amendments.

It is important to highlight that under GST, ITC is availed by the taxpayers through GSTR-3B and not through books. Hence, effectively, a taxpayer will be entitled to avail the ITC till filing of the GSTR-3B of October of the next financial year with the cut-off date of 30th November of the next financial year. Taxpayers will be provided with an additional period of a month for availing ITC or for rectification of any omission or incorrect particulars in the above specified returns without linking the same with the due date or actual date of filing of return but with a specific date i.e., 30th November of the next financial year.

Rationale for amendments
Let us refer Agenda for 43rd GST Council Meeting wherein GST Law Committee has suggested for these amendments stating that rectification of particulars in details of outward supplies under section 37 is presently linked with furnishing of return for September month of next financial year. Rectification of particulars under section 39 is linked with due date of furnishing of return for September month of next financial year. ITC under section 16 is barred in respect of any invoice or debit note after the due date of furnishing of the return under section 39 for the month of September of the next financial year. Similar time limits have been made under Section 34(2) and section 52(6).

Accordingly, law committee had recommended that a fixed date 30th November of the next financial year be fixed for all of these compliances, as it serves two purposes:

a. In the portal, after the cut-off date no amendment would be permitted.
b. It provides one more month to taxpayer to amend their returns.

Way forward
Once, these amendments are notified after enactment of the Finance Act 2022, the taxpayers will get an additional tax period for availing the ITC on their inward supplies or for rectification of any omission or incorrect particulars in the above specified returns.