In the present case, the appellant was engaged in the manufacture of chemicals. For storing raw materials as well as finished products, the appellant entered into a lease agreement with Usha Tubes and Pipes Pvt Ltd (UTPL). For the months of April 2018 to March 2019, UTPL issued a single tax invoice specifying the rent for 12 months dated April 1, 2020. The appellant approached the Authority for Advance Ruling (AAR) seeking clarity on whether the invoice dated April 1 is eligible for ITC if claimed before filing the return for September 2021 or the annual return for the financial year 20-21 in terms of Section 16(4) of the CGST Act.
The AAR held that the said invoice pertains to the services rendered in the financial year 2018-19 and hence is hit by limitation for claiming ITC under Section 16(4). It was further held that availing ITC on such invoice amounts to contravention of the condition specified under sub-section (4) of Section 16.
An appeal was filed by Vishnu Chemicals against the said decision of the AAR before the Appellate Authority for Advance Ruling. It was contended that there is no condition under Section 16(4) which indicates that only invoices issued within 30 days of the supply of services are eligible for credit. It was also contended that the restriction under Section 16(4) is not for the supplies made during a financial year, but only for the documents issued during the financial year.
Source: Barandbench
