The Notification No. 22/2024–Central Tax outlines a special procedure for rectifying orders issued under sections 73, 74, 107, or 108 of the CGST Act, specifically addressing cases where input tax credit (ITC) was initially availed in contravention of sub-section (4) of section 16, however, which is now available under sub-sections (5) or (6) of section 16 of the said Act. This notification provides a pathway for affected taxpayers to seek rectification of the original order. Said notification has been followed by an explanatory circular 237/31/2024-GST.
Section 16(4) of the CGST Act sets a time limit for claiming input tax credit (ITC). It stipulates that ITC must be claimed by the earlier of two dates: the due date of filing the return under Form GSTR-3B for the month of November following the end of the financial year in which the invoice or debit note was issued, or the date of filing the annual return for that financial year.
For instance, of relief under section 16(5), XYZ enterprise was issued an invoice in the financial year 2020-21. As per Section 16(4) of the CGST Act, the deadline to claim Input Tax Credit (ITC) was through a Form GSTR-3B filed on or before 20th October 2021. However, the company filed its Form GSTR-3B on 20th January 2022, thereby making it ineligible to claim the ITC. However, by insertion of section 16(5), XYZ shall now be eligible of the ITC claimed on 20th January 2022.
Section 16(6) sets the deadline for claiming the input tax credit in case GST registration was cancelled and revoked however the ITC became time barred between the period of cancellation date and revocation date.
For instance, of relief under section 16(6), The GST department suo-moto cancelled the GST registration of XYZ Enterprises on October 19, 2021, with an effective cancellation date of August 31, 2021. As a result, XYZ was unable to file its Form GSTR-3B for September 2021. The registration was revoked on January 6, 2022, and XYZ subsequently filed its Form GSTR-3B within two days of the revocation. Technically, XYZ was ineligible to claim ITC on an invoice from FY 2020-21 in the September 2021 GSTR-3B filed on January 6, 2022, as per Section 16(4). However, due to the newly introduced Section 16(6), XYZ is now eligible because it meets the following conditions: (1) the ITC was not time-barred as of October 19, 2021, when the registration was cancelled, and (2) XYZ filed the September 2021 GSTR-3B within 30 days of the revocation.
Different scenarios under which relief may be sought, are provided below:
| Investigation without a Demand notice under Section 73 or 74. A notice under Form GST DRC-01A shall also be covered under this scenario. | Proper officer shall take cognizance of section 16(5) and 16(6) while dropping proceedings of investigation. |
| Demand Notice issued, yet to be adjudicated | Adjudicating authority shall take cognizance of section 16(5) and 16(6) while issuing the final order. |
| Appeal filed with commissioner appeals, final order yet be issued by said appellate authority | Appellate authority shall take cognizance of section 16(5) and 16(6) while issuing the final order. |
| Proceedings initiated by revisional authority, final order yet to be issued by said authority | Revisional authority shall take cognizance of section 16(5) and 16(6) while issuing the final order. |
| Negative order passed by adjudicating authority or commissioner appeals, however, appeal before commissioner appeals or tribunal is yet to be filed, as the case may be | 1. File application for rectification of original order of adjudicating authority or commissioner appeals, as the case may be. 2. Application shall be filed online on common portal of GST along with Annexure-A of said form. 3. Application shall be filed within 6 months from 08.10.2024. 4. Rectification order shall be issued under Form GST DRC-08 or APL-04 within 3 months of receiving application by the proper officer from a taxpayer. |
| In case there were multiple issues involved in the notice / demand order / appellate authority order, including issue related to section 16(4), and tax payer is willing to avail benefit of section 128A | 1. The taxpayer must adhere to the procedure outlined in Circular No. 238/32/2024 to avail the benefit of interest and penalty waiver. 2. When submitting applications under this circular, the taxpayer is required to disclose the details of relief available under Section 16(5) or 16(6). Therefore, a separate application for rectification of the order is not necessary. The rectification will be addressed as part of the waiver application filed under Section 128A. |
Note:
| SW Point of View: This notification provides a pathway for taxpayers to correct specific types of ITC-related orders without needing to file an appeal, provided they meet the specified criteria and adhere to the defined procedure. |
Notification No. 22/2024–Central Tax and Circular No. 237/31/2024-GST
