In order to remove the ambiguity in the provisions and to resolve the dilemma of people registered under GST with an intent to improve the compliance, CBIC has issued clarifications on GST issues which were earlier subject to contradictory views. The clarifications have been issued vide. Circular No. 160/16/2021-GST dated 20.09.2021. An analysis of the clarifications on GST issues has been provided below:
- Delinking of date of debit note from date of invoice
The ITC corresponding to a particular invoice or debit note is not available to be claimed till infinity. A period has been prescribed beyond which if it is claimed, the same will be disallowed. The relevant provision in this regard happens to be Section 16(4) of the CGST Act. A comparison has been made below of the aforementioned Section pre and post amendment.
| Pre Amendment | Post Amendment |
| A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both 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 invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier. | A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both 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 |
The section stands amended by Finance Act, 2020. The amendment resulted in delinking of date of issuance of debit note from date of issuance of invoice by omitting the words “invoice relating to such” w.e.f. 1.01.2021. Now, post amendment, ITC will be available to be claimed till the due date of return filing under section 39 for the September month following the end of the financial year to which such invoice/ debit note pertains or before furnishing of annual return, whichever is earlier.
The current position in pursuance of the amendment made is that the relevant date for determining the ‘financial year‘ for the above purpose will be date of issuance of debit note rather than the date of issuance of underlying invoice in cases where debit note has been issued and ITC corresponding to it is to be claimed.
Further, it has been clarified that the amended provision will be applicable even in relation to debit notes issued prior to 1.01.2021, where the corresponding ITC is being claimed on or after 1.01.2021.
2. Is refund of unutilised ITC prohibited where rate of Export Duty is Nil?
Where goods are being exported under LUT/ Bond and such export are subject to export duty, the refund of unutilised ITC is disallowed under the first proviso to section 54(3).
The first proviso to Section 54(3) reads as – “Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty”
However, the said proviso intends to disallow such refund in those cases where the goods are ACTUALLY subject to export duty and bearing the burden of it at the time of export. Hence, cases where export duty rate is Nil, the goods are fully exempted from export duty or are not covered in second schedule to CTA, 1975, the refund of unutilised ITC will be available.
3. Is physical copy of Invoice needed where e-invoice is issued and the goods are in transit?
As per amended Rule 138A(2) of CGST Rules, there is no need of physical copy when goods are in movement and the case happens to be the one where e-invoice has been issued under Rule 48(4).The amended Rule states that in such cases, the Quick Reference (QR) Code having an embedded Invoice Reference Number in it, may be produced electronically by the proper officer as an alternate to physical copy of tax invoice.
