12 December 2022
Department has concluded GST assessment of 2017-18 now in the month of Oct 2022 and have issued AO with a demand of RSM not paid on URD expenses (business promotional expenditure) The department has given a demand of TAX liability for not paying RCM and applicable interest upto date. My question is whether can I issue self invoice in the month of paying the demand on RCM liability part and take credit in subsequent month of self invoicing and charge interest as expenditure in my books of accounts for the current FY
10 July 2024
No, you cannot issue a self-invoice retrospectively for the RCM liability demanded by the tax department for the year 2017-18. Here’s why:
1. **Timing of Invoice Issuance:** - A self-invoice should ideally be issued at the time of receiving the supply of goods or services from an unregistered dealer. It cannot be issued retrospectively for past transactions unless it was missed earlier and is corrected promptly.
2. **Legal Requirements:** - Under GST, the issuance of invoices and the timelines for claiming input tax credit (ITC) are crucial. Retroactive changes to invoices could lead to compliance issues and may not be acceptable under the GST law.
3. **Input Tax Credit (ITC) Limitations:** - As per GST laws, you are generally required to avail ITC within a specified time frame from the due date of filing annual return (GSTR-9). For FY 2017-18, the last date for filing GSTR-9 was extended to January 2020. Hence, claiming ITC for the year 2017-18 at this stage is not feasible.
4. **Interest on Delayed Payment:** - Interest charged by the tax department is a statutory liability and typically cannot be claimed as an expense in your books of accounts for GST purposes. It is a cost associated with delayed payment of GST liabilities.
### Recommendations:
- **Consultation with GST Expert:** It’s advisable to consult with a GST expert or tax advisor who can review your specific case and provide guidance on the correct approach to addressing the demand raised by the tax department.
- **Payment Compliance:** Ensure timely compliance with the demand raised by the tax department, including payment of the RCM liability and interest, to avoid further penalties or legal repercussions.
- **Accounting Treatment:** Record the payment made to the tax department accurately in your books of accounts, reflecting it as a GST liability discharge and interest expense, as per the rules applicable.
By following these steps and seeking professional advice, you can effectively manage the GST assessment outcome and ensure compliance with GST laws.
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