The Authority on Advance Rulings in Karnataka ruled that registered persons are not eligible to claim the tax credits on input invoices of goods or services procured or availed by a registered person before its effective date of registration under GST.
The ruling was made by a bench of the Authority consisting of Sri. Harish Dharnia, Addl. Commissioner of Central Tax, Member (Central Tax) and Dr Ravi Prasad M.P Joint Commissioner of Commercial Taxes on an application made by M/s Knowlarity Communications Pvt. Ltd.
The Applicant received certain input invoices of goods or services procured by its office located in the State of Karnataka. These invoices were issued from July 1st, 2017 to March 31st, 2018, i.e., before the effective date of registration. The effective date of registration under the GST Law in the State of Karnataka was on 01.04.2018.
The question that the applicant sought a ruling on was whether a registered person under GST Act can claim eligible input tax credits paid on input invoices of goods or services procured or availed before the effective date of registration under GST.
The applicant argued that whether or not a person is registered under GST Act, 2017, the person is eligible to claim input tax credit issued provided the inputs are eligible and received in the course or furtherance of business and the time period under section 16(4) of the CGST Act, 2017 has not lapsed. The applicant further bought in Sec 16, 16(2), 16(4) of the CGST Act, 2017 to point out that the section does not restrict a registered person from taking input tax credit of invoices that were issued by the suppliers before the effective date of registration. The applicant also argued that the date of issue of the invoice of supply should not bear any relevance until the date-time period given under section 16(4) of the CGST Act, 2017 has lapsed.
The Authority while analysis of the issue observed that all the provisions quoted by the applicant are applicable to a registered person whose registration is effective and not to a registered person for the period of non-registration.
The Authority further ruled that in case of goods lying in stock on the day previous to the effective date of registration, which is intended to be used in the course or furtherance of business, the applicant is eligible to claim an input tax credit. This shall be subject to other conditions and restrictions prescribed in the GST Act and in Rule 40 of the CGST Rules, provided the application for registration has been filed within thirty days from the date on which the applicant became liable for registration under the Act.Subscribe Taxscan AdFree to view the Judgment