CBIC clarifications on Implementation of new time limits for availing Input Tax Credit

CBIC has issued clarifications on Implementation of amendments to CGST Act, 2017 that provided new time limits for availing Input Tax Credit (ITC) under certain circumstances. The clarifications were provided in the form of FAQs:

1. No Refund on Retrospective Extension:
   Section 150 of the Finance (No. 2) Act, 2024, states that no refund will be granted for any taxes paid or ITC reversed due to contraventions of sub-section (4) of Section 16. This provision ensures that taxpayers cannot claim refunds on past actions, even if the ITC is now allowable under sub-section (5) or (6). This clarification is important for businesses that may have reversed ITC in previous periods but are now entitled to claim it.
2. Special Procedure for Rectification of Orders:
   Notification No. 22/2024, issued on October 8, 2024, introduces a special procedure for taxpayers who were previously penalized for wrong ITC claims under sub-section (4). If no appeal was filed against the penalty order, they can apply for rectification under Section 148 of the CGST Act. The process is streamlined through the GST portal, allowing for electronic submission of rectification requests. Taxpayers can rectify orders issued under Sections 73, 74, 107, or 108 of the CGST Act, provided they meet the criteria set out in the notification.
3. Handling of Ongoing Investigations or Notices:
   For cases where investigations were initiated for wrong ITC claims, but no demand notice has been issued under Sections 73 or 74, tax authorities are now required to consider the retrospectively inserted sub-section (5) and (6). This also applies to cases where preliminary intimation under rule 142(1A) was issued, but no formal notice has been served. Essentially, taxpayers can benefit from the new provisions even in ongoing investigations.
4. Cases Where Demand Notices or Orders Have Been Issued:
   In cases where demand notices have been issued under Sections 73 or 74, but no final order has been passed, adjudicating authorities must take the new sub-sections into account when passing their judgment. Similarly, if an appeal is pending under Section 107 or a revisional proceeding is ongoing under Section 108, the authorities must consider these retrospective provisions.