Act: Central Goods & Service Tax Act, 2017

Circular No. 211/05/2024-GST

Date: 26^th June 2024

Background: In case of supplies received by a registered person (recipient) from an unregistered person (supplier), the said recipient is required to pay GST under reverse charge mechanism (RCM) in respect of supplies received from unregistered person. In such cases, the recipient is required to issue tax invoice for such supplies under section 31(3)(f).

Section 16(2)(a) specifies 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.

Section 16(4) specifies that 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 30^th November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Section 31(3)(f) specifies that a registered person who is liable to pay tax under sub-section (3) or subsection (4) of section 9 shall issue an invoice in respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or services or both.

Clarification issued by the Board: On receipt of various representations, the Board has clarified:

1. In cases of supplies received from unregistered suppliers, where tax has to be paid by the recipient under reverse charge mechanism (RCM) and where invoice is to be issued by the recipient of the supplies in accordance with section 31(3)(f) of CGST Act, the relevant financial year for calculation of time limit for availment of input tax credit under the provisions of section 16(4) of CGST Act will be the financial year in which the invoice has been issued by the recipient under section 31(3)(f) of CGST Act, subject to payment of tax on the said supply by the recipient and fulfilment of other conditions and restrictions of section 16 and 17 of CGST Act.
2. In case, the recipient issues the invoice after the time of supply of the said supply and pays tax accordingly, he will be required to pay interest on such delayed payment of tax. Further, in cases of such delayed issuance of invoice by the recipient, he may also be liable to penal action under the provisions of Section 122 of CGST Act