For the purpose of ensuring uniformity in the implementation of GST provisions, CBIC has issued clarifications vide. Circular No. 160/16/2021-GST dated 20.09.2021 in respect of the following issues:
1. What will be the relevant date for determining “Financial year” for the purpose of provisions of Section 16(4)?
2. Is refund of unutilised ITC prohibited where the export of goods is subject to export duty at Nil rate?
3. Is a physical copy of the invoice required when goods are in transit and an e-invoice has been issued?
The analysis of clarifications given by CBIC has been provided below-
1. Delinking of date of debit note from date of invoice
Section 16(4) stands amended by Finance Act, 2020. The amendment resulted in delinking of date of issuance of debit note from date of issuance of invoice by omitting the words “invoice relating to such” w.e.f. 1.01.2021. Now, post amendment, ITC will be available to be claimed till the due date of return filing under section 39 for the September month following the end of the financial year to which such invoice/ debit note pertains or before furnishing of annual return, whichever is earlier.
The current position in pursuance of the amendment made is that the relevant date for determining the ‘financial year‘ for the above purpose will be date of issuance of debit note rather than the date of issuance of underlying invoice in cases where debit note has been issued and ITC corresponding to it is to be claimed.
Further, it has been clarified that the amended provision will be applicable even in relation to debit notes issued prior to 1.01.2021, where the corresponding ITC is being claimed on or after 1.01.2021.
2. Is refund of unutilised ITC prohibited where the rate of Export Duty is Nil?
The first proviso to Section 54(3) reads as – “Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty” However, the said proviso intends to disallow such refund in those cases where the goods are ACTUALLY subject to export duty and bearing the burden of it at the time of export. Hence, in cases where the export duty rate is Nil, the goods are fully exempted from export duty or are not covered in second schedule to CTA, 1975, the refund of unutilised ITC will be available.
3. Is a physical copy of the Invoice needed where an e-invoice is issued and the goods are in transit?
As per amended Rule 138A(2) of CGST Rules, there is no need of a physical copy when goods are in movement and the case happens to be the one where an e-invoice has been issued under Rule 48(4). The amended rule states that in such cases, the Quick Reference (QR) Code having an embedded Invoice Reference Number in it, may be produced electronically by the proper officer as an alternative to a physical copy of tax invoice.