The Government of India, following the recommendations of the 54th GST Council meeting, issued Notification No. 22/2024 – CT dated 08.10.2024, introducing critical updates for taxpayers dealing with Input Tax Credit (ITC) compliance issues. This notification provides relief for registered taxpayers who previously faced demands for wrongly availed ITC due to contraventions under sub-section (4) of Section 16 of the CGST Act.
Recent amendments to Section 16, particularly the insertion of sub-sections (5) and (6), now allow certain taxpayers to rectify demand orders issued under Sections 73 and 74. A new functionality has also been made available on the GST Portal to streamline this rectification process.
Understanding the Notification
Key Provisions:
- Taxpayers who were issued demand orders under Sections 73 or 74 for contravening sub-section (4) of Section 16 can now rectify these orders if:
- The ITC in question has become eligible under the newly added sub-sections (5) and (6) of Section 16.
- They follow the prescribed rectification procedure.
- This rectification is applicable only if the ITC eligibility aligns with the updated provisions of the CGST Act.
Legal Basis:
- Sub-section (4): Mandates adherence to timelines for availing ITC.
- Sub-sections (5) & (6): Introduced as amendments to relax conditions, providing clarity on retrospective ITC eligibility.
How to File a Rectification Application
The GST Portal now facilitates the filing of rectification applications. Here’s a step-by-step guide:
Step 1: Log in to the GST Portal
- Navigate to Services > User Services > My Applications.
Step 2: Select the Application Type
- Choose Application for Rectification of Order from the dropdown menu.
Step 3: Download the Proforma
- Use the hyperlink provided on the portal to download the proforma in Annexure A (word format).
Step 4: Fill in Annexure A
- Enter details of the demand order, including:
- ITC wrongly availed.
- Relevant contraventions under sub-section (4) of Section 16.
- Justification for eligibility under sub-sections (5) and (6).
Step 5: Upload and Submit
- Attach the completed Annexure A while filing the application and click on the NEW APPLICATION button to submit.
Case Study: Illustrating the Impact
Scenario: A manufacturing company received a demand order for availing ITC beyond the prescribed timeline, violating Section 16(4). With the introduction of sub-section (6), their ITC is now retrospectively eligible due to supply chain complexities recognized by the government.
Action Taken: The company logs into the GST Portal, completes the rectification application as per the steps outlined, and uploads the required documents in Annexure A.
Outcome: The demand order is rectified, and the wrongly availed ITC is revalidated, ensuring compliance and reducing financial stress.
Benefits of the Rectification Process
- Enhanced Compliance: Ensures alignment with the latest legal provisions under Section 16.
- Ease of Filing: User-friendly functionality on the GST Portal simplifies rectification.
- Taxpayer Relief: Avoids prolonged disputes and financial burdens due to ITC disallowances.
- Clarity: Encourages a structured approach to address ITC discrepancies
Conclusion
Notification No. 22/2024-CT marks a significant step toward resolving ITC-related disputes for taxpayers. The introduction of sub-sections (5) and (6) of Section 16, coupled with the rectification functionality, offers a structured and transparent mechanism to ensure compliance. Taxpayers are encouraged to utilize this opportunity to rectify past errors and maintain accurate GST records.