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Circular No. 160/16/2021-GST
1
F. No. CBIC-20001/8/2021-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
******
New Delhi, dated the 20th September, 2021
To
The Pr. Chief Commissioners / Chief Commissioners / Principal Commissioners /
Commissioners of Central Tax (All)
The Principal Directors General / Directors General (All)
Madam / Sir,
Subject: Clarification in respect of certain GST related issues - reg.
Various representations have been received from taxpayers and other stakeholders seeking
clarification in respect of certain issues pertaining to GST laws. The issues have been examined.
In order to ensure uniformity in the implementation of the provisions of the law across field
formations, the Board, in exercise of its powers conferred by section 168(1) of the Central Goods
and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarifies each of these
issues as under:
S. No.
Issue
Clarification
1.
Section 16 (4), as amended with
effect from 01.01.2021, provides
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 the due
date of furnishing of the return
under section 39 for the month
of September following the end
of financial year to which such
1.
With effect from 01.01.2021, section 16(4)
of the CGST Act, 2017 was amended vide
the Finance Act, 2020, so as to delink the
date of issuance of debit note from the date
of issuance of the underlying invoice for
purposes of availing input tax credit.
The amendment made is shown as below:
“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
Circular No. 160/16/2021-GST
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invoice or debit note pertains
or furnishing of the relevant
annual return, whichever is
earlier.
Doubts have been raised seeking
following clarification:
1.
Which of the following
dates are relevant to
determine the ‘financial
year’ for the purpose of
section 16(4):
(a) date of issuance
of debit note, or
(b) date of issuance
of
underlying
invoice.
2.
Whether any availment
of input tax credit, on or
after
01.01.2021,
in
respect of debit notes
issued either prior to or
after 01.01.2021, will
be governed by the
provisions
of
the
amended section 16(4),
or
the
amended
provision
will
be
applicable
only
in
respect of the debit
notes
issued
after
01.01.2021?
after the due date of furnishing of the
return under section 39 for the month
of September following the end of
financial year to which such invoice or
invoice relating to such debit note
pertains or furnishing of the relevant
annual return, whichever is earlier.”
As can be seen, the words “invoice
relating to such” were omitted w.e.f.
01.01.2021.
2.
The intent of law as specified in the
Memorandum explaining the Finance Bill,
2020 states that “Clause 118 of the Bill
seeks to amend sub-section (4) of section
16 of the Central Goods and Services Tax
Act so as to delink the date of issuance of
debit note from the date of issuance of the
underlying invoice for purposes of
availing input tax credit.
3.
Accordingly, it is clarified that:
a) w.e.f. 01.01.2021, in case of debit notes,
the date of issuance of debit note (not the
date of underlying invoice) shall determine
the relevant financial year for the purpose
of section 16(4) of the CGST Act.
b) The availment of ITC on debit notes in
respect of amended provision shall be
applicable from 01.01.2021. Accordingly,
for availment of ITC on or after
01.01.2021, in respect of debit notes issued
either prior to or after 01.01.2021, the
eligibility for availment of ITC will be
governed by the amended provision of
section 16(4), whereas any ITC availed
prior to 01.01.2021, in respect of debit
notes, shall be governed under the
Circular No. 160/16/2021-GST
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provisions of section 16(4), as it existed
before the said amendment on 01.01.2021.
Illustration 1. A debit note dated 07.07.2021 is
issued in respect of the original invoice dated
16.03.2021. As the invoice pertains to F.Y. 2020-
21, the relevant financial year for availment of ITC
in respect of the said invoice in terms of section
16(4) of the CGST shall be 2020-21. However, as
the debit note has been issued in FY 2021-22, the
relevant financial year for availment of ITC in
respect of the said debit note shall be 2021-22 in
terms of amended provision of section 16(4) of the
CGST Act.
Illustration 2. A debit note has been issued on
10.11.2020 in respect an invoice dated 15.07.2019.
As per amended provision of section 16(4), the
relevant financial year for availment of input tax
credit on the said debit note, on or after 01.01.2021,
will be FY 2020-21 and accordingly, the registered
person can avail ITC on the same till due date of
furnishing of FORM GSTR-3B for the month of
September, 2021 or furnishing of the annual return
for FY 2020-21, whichever is earlier.
2.
Whether carrying physical copy
of invoice is compulsory during
movement of goods in cases
where suppliers have issued
invoices
in
the
manner
prescribed under rule 48 (4) of
the CGST Rules, 2017 (i.e. in
cases of e-invoice).
1.
Rule 138A (1) of the CGST Rules, 2017
inter-alia, provides that the person in
charge of a conveyance shall carry— (a) the
invoice or bill of supply or delivery
challan, as the case may be; and (b) a copy
of the e-way bill or the e-way bill number,
either physically or mapped to a Radio
Frequency
Identification
Device
embedded on to the conveyance in such
manner as may be notified by the
Commissioner.
2.
Further, rule 138A (2) of CGST Rules, after
being amended vide notification No.
72/2020-Central Tax dated 30.09.2020,
Circular No. 160/16/2021-GST
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states that “In case, invoice is issued in the
manner prescribed under sub-rule (4) of
rule 48, the Quick Reference (QR) code
having an embedded Invoice Reference
Number (IRN) in it, may be produced
electronically, for verification by the
proper officer in lieu of the physical copy of
such tax invoice”
3.
A conjoint reading of rules 138A (1) and
138A (2) of CGST Rules, 2017 clearly
indicates that there is no requirement to
carry the physical copy of tax invoice in
cases where e-invoice has been generated
by the supplier. After amendment, the
revised
rule
138A
(2)
states
in
unambiguous words that whenever e-
invoice has been generated, the Quick
Reference (QR) code, having an embedded
Invoice Reference Number (IRN) in it,
may
be
produced
electronically
for
verification by the proper officer in lieu of
the physical copy of such tax invoice.
4.
Accordingly, it is clarified that there is no
need to carry the physical copy of tax
invoice in cases where invoice has been
generated by the supplier in the manner
prescribed under rule 48(4) of the CGST
Rules and production of the Quick
Response
(QR)
code
having
an
embedded Invoice Reference Number
(IRN) electronically, for verification by
the proper officer, would suffice.
3.
Whether the first proviso to
section 54(3) of CGST / SGST
Act,
prohibiting
refund
of
unutilized ITC is applicable in
case of exports of goods which
1. The term ‘subjected to export duty’ used in
first proviso to section 54(3) of the CGST
Act, 2017 means where the goods are
actually leviable to export duty and suffering
export duty at the time of export. Therefore,
goods in respect of which either NIL rate is
Circular No. 160/16/2021-GST
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are having NIL rate of export
duty.
specified in Second Schedule to the Customs
Tariff Act, 1975 or which are fully exempted
from payment of export duty by virtue of any
customs notification or which are not
covered under Second Schedule to the
Customs Tariff Act, 1975, cannot be
considered to be subjected to any export duty
under Customs Tariff Act, 1975.
2. Accordingly, it is clarified that only those
goods which are actually subjected to
export duty i.e., on which some export
duty has to be paid at the time of export,
will be covered under the restriction
imposed
under
section
54(3)
from
availment of refund of accumulated ITC.
Goods, which are not subject to any export
duty and in respect of which either NIL rate
is specified in Second Schedule to the
Customs Tariff Act, 1975 or which are fully
exempted from payment of export duty by
virtue of any customs notification or which
are not covered under Second Schedule to the
Customs Tariff Act, 1975, would not be
covered by the restriction imposed under
the first proviso to section 54(3) of the
CGST Act for the purpose of availment of
refund of accumulated ITC.
2.
It is requested that suitable trade notices may be issued to publicize the contents of this
Circular.
3.
Difficulty, if any, in the implementation of this Circular may be brought to the notice of
the Board. Hindi version will follow.
(Sanjay Mangal)
Principal Commissioner
