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August 2023

Input Tax Credit – Disputed Propositions W.R.T. Section 16(4) Of The CGST Act

By Mandar Telang, Chartered Accountant
Reading Time 25 mins
INTRODUCTION
Goods and Services Tax (GST) being a value-added tax, Input Tax Credit (ITC) is a very pivotal link in its design. Any denial in respect of Input Tax Credit results in tax on tax and affect the product pricing and operating cash flow. Going by the justification provided in the First Discussion Paper on GST in India published by the Empowered Committee of State Financial Ministers on 10th November, 2009, regarding the introduction of GST1, there is no dispute that the essence of GST law lies in improvising ways to reduce the cascading effect of taxes by increasing the possibility of set-off by maintaining a continuous chain of set-off from the point of origination to the point of final sale to the customer. Therefore, the set-off or ITC-related provisions are to be interpreted keeping the said remedy in mind.The GST laws put various restrictions on the entitlement of input tax credits. One such restriction is the time limit within which the ITC can be taken. This article deals with the possible interpretational disputes regarding section 16(4) of the CGST Act. OVERVIEW OF THE ITC PROVISIONS IN GENERAL
Chapter V of the CGST Act deals with Input Tax Credits. Section 16 of the CGST Act deals with the eligibility and conditions for taking input tax cred
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