Circular No. 160/16/2021-GST [C10-5GR]

Various representations have been received from taxpayers and other stakeholders seeking clarification in respect of certain issues pertaining to GST laws. The issues have been examined. In order to ensure uniformity in the implementation of the provisions of the law across field formations, the Board, in exercise of its powers conferred by section 168(1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarifies each of these issues as under:

S. No. Issue Clarification

1. Section 16 (4), as amended with 1. With effect from 01.01.2021, section 16(4) effect from 01.01.2021, provides of the CGST Act, 2017 was amended vide that a registered person shall not the Finance Act, 2020, so as to delink the be entitled to take input tax date of issuance of debit note from the date credit in respect of any invoice of issuance of the underlying invoice for or debit note for supply of goods purposes of availing input tax credit. or services or both after the due The amendment made is shown as below: date of furnishing of the return “A registered person shall not be under section 39 for the month entitled to take input tax credit in of September following the end respect of any invoice or debit note for of financial year to which such supply of goods or services or both

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invoice or debit note pertains after the due date of furnishing of the or furnishing of the relevant return under section 39 for the month annual return, whichever is of September following the end of earlier. financial year to which such invoice or invoice relating to such debit note Doubts have been raised seeking pertains or furnishing of the relevant following clarification: annual return, whichever is earlier.”

1. Which of the following As can be seen, the words “invoice dates are relevant to relating to such” were omitted w.e.f. determine the ‘financial 01.01.2021. year’ for the purpose of section 16(4): 2. The intent of law as specified in the

(a) date of issuance Memorandum explaining the Finance Bill, of debit note, or 2020 states that “Clause 118 of the Bill

(b) date of issuance seeks to amend sub-section (4) of section of underlying 16 of the Central Goods and Services Tax invoice. Act so as to delink the date of issuance of

2. Whether any availment debit note from the date of issuance of the of input tax credit, on or underlying invoice for purposes of after 01.01.2021, in availing input tax credit. respect of debit notes issued either prior to or 3. Accordingly, it is clarified that: after 01.01.2021, will be governed by the a) w.e.f. 01.01.2021, in case of debit notes, provisions of the the date of issuance of debit note (not the amended section 16(4), date of underlying invoice) shall determine or the amended the relevant financial year for the purpose provision will be of section 16(4) of the CGST Act. applicable only in b) The availment of ITC on debit notes in respect of the debit respect of amended provision shall be notes issued after applicable from 01.01.2021. Accordingly, 01.01.2021? for availment of ITC on or after 01.01.2021, in respect of debit notes issued either prior to or after 01.01.2021, the eligibility for availment of ITC will be governed by the amended provision of section 16(4), whereas any ITC availed prior to 01.01.2021, in respect of debit notes, shall be governed under the

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provisions of section 16(4), as it existed before the said amendment on 01.01.2021.

Illustration 1. A debit note dated 07.07.2021 is issued in respect of the original invoice dated 16.03.2021. As the invoice pertains to F.Y. 2020- 21, the relevant financial year for availment of ITC in respect of the said invoice in terms of section 16(4) of the CGST shall be 2020-21. However, as the debit note has been issued in FY 2021-22, the relevant financial year for availment of ITC in respect of the said debit note shall be 2021-22 in terms of amended provision of section 16(4) of the CGST Act.

Illustration 2. A debit note has been issued on 10.11.2020 in respect an invoice dated 15.07.2019. As per amended provision 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 accordingly, the registered person can avail ITC on the same till due date of furnishing of FORM GSTR-3B for the month of September, 2021 or furnishing of the annual return for FY 2020-21, whichever is earlier.

2. Whether carrying physical copy 1. Rule 138A (1) of the CGST Rules, 2017 of invoice is compulsory during inter-alia, provides that the person in movement of goods in cases charge of a conveyance shall carry— (a) the where suppliers have issued invoice or bill of supply or delivery invoices in the manner challan, as the case may be; and (b) a copy prescribed under rule 48 (4) of of the e-way bill or the e-way bill number, the CGST Rules, 2017 (i.e. in either physically or mapped to a Radio cases of e-invoice). Frequency Identification Device embedded on to the conveyance in such manner as may be notified by the Commissioner.

2. Further, rule 138A (2) of CGST Rules, after being amended vide notification No. 72/2020-Central Tax dated 30.09.2020,

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states that “In case, invoice is issued in the manner prescribed under sub-rule (4) of rule 48, the Quick Reference (QR) code having an embedded Invoice Reference Number (IRN) in it, may be produced electronically, for verification by the proper officer in lieu of the physical copy of such tax invoice”

3. A conjoint reading of rules 138A (1) and 138A (2) of CGST Rules, 2017 clearly indicates that there is no requirement to carry the physical copy of tax invoice in cases where e-invoice has been generated by the supplier. After amendment, the revised rule 138A (2) states in unambiguous words that whenever e- invoice has been generated, the Quick Reference (QR) code, having an embedded Invoice Reference Number (IRN) in it, may be produced electronically for verification by the proper officer in lieu of the physical copy of such tax invoice.

4. Accordingly, it is clarified that there is no need to carry the physical copy of tax invoice in cases where invoice has been generated by the supplier in the manner prescribed under rule 48(4) of the CGST Rules and production of the Quick Response (QR) code having an embedded Invoice Reference Number (IRN) electronically, for verification by the proper officer, would suffice.

3. Whether the first proviso to 1. The term ‘subjected to export duty’ used in section 54(3) of CGST / SGST first proviso to section 54(3) of the CGST Act, prohibiting refund of Act, 2017 means where the goods are unutilized ITC is applicable in actually leviable to export duty and suffering case of exports of goods which export duty at the time of export. Therefore, goods in respect of which either NIL rate is

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are having NIL rate of export specified in Second Schedule to the Customs duty. Tariff Act, 1975 or which are fully exempted from payment of export duty by virtue of any customs notification or which are not covered under Second Schedule to the Customs Tariff Act, 1975, cannot be considered to be subjected to any export duty under Customs Tariff Act, 1975.

2. Accordingly, it is clarified that only those goods which are actually subjected to export duty i.e., on which some export duty has to be paid at the time of export, will be covered under the restriction imposed under section 54(3) from availment of refund of accumulated ITC. Goods, which are not subject to any export duty and in respect of which either NIL rate is specified in Second Schedule to the Customs Tariff Act, 1975 or which are fully exempted from payment of export duty by virtue of any customs notification or which are not covered under Second Schedule to the Customs Tariff Act, 1975, would not be covered by the restriction imposed under the first proviso to section 54(3) of the CGST Act for the purpose of availment of refund of accumulated ITC.

2. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.

3. Difficulty, if any, in the implementation of this Circular may be brought to the notice of the Board. Hindi version will follow.