When the goods are purchased during the end of the month and received in next month due to return of in every month its create a confusion among the tax payer that when to take input of the same since billing return period and Receiving return periods are different.
Section 16(2) of CGST Rules 2017 clarifies that:
No registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,––
- he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;
- he has received the goods or services or
Therefore both the conditions to be satisfied that one has to be in possession of the Invoice and also received the Goods. Hence when the goods are in transit and received in next month the Input credit on the same has to be taken next Month i.e., in the month of receipt.
Explanation.—For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;
According to the Explanation to Section 16(2) given Above where the ownership of the goods has been transferred before the movement of the goods by way of transfer of documents or otherwise than it is deemed that purchaser has received the goods. Hance input to be taken in the Month when the Invoice has been received and ownership to goods has been transferred but not in the month of actual physical delivery of the goods.
Some Other Conditions:
- Where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment:
- Where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed:
- The recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon.
- Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961, the input tax credit on the said tax component shall not be allowed.
By CA Prasenjit Paul
Author can be reached at paul_prasenjit@yahoo.co.in