In a crucial update aimed at streamlining GST compliance, the Central Board of Indirect Taxes and Customs (CBIC) has issued Notification No. 22/2024-Central Tax dated October 8, 2024, to notify the mechanism for implementing newly inserted sub-sections (5) and (6) in Section 16 of the Central Goods and Services Tax (CGST) Act, 2017. This notification provides a special procedure for rectifying orders related to the wrongful availment of input tax credit (ITC), allowing registered taxpayers to correct past errors under specific conditions.
Key Highlights of the Notification
- Eligibility for Rectification: The notification allows registered persons against whom an order under Sections 73, 74, 107, or 108 of the CGST Act has been issued confirming the demand for wrong availment of ITC, to apply for rectification. This applies to cases where the ITC was deemed wrongly availed due to the contravention of sub-section (4) of Section 16 but is now allowed under newly inserted sub-sections (5) or (6).
- Application Process: Eligible taxpayers must submit an electronic application on the GST portal within six months from the date of this notification. Along with the application, they must upload relevant information using the proforma provided in Annexure A of the notification.
- Role of the Proper Officer: The officer who issued the original order will be responsible for processing the rectification request and must issue a rectified order within three months of receiving the application.
- Electronic Submission of Rectified Orders: Once the rectification is complete, the proper officer will upload a summary of the rectified order electronically in FORM GST DRC-08 (for orders under Sections 73 and 74) or FORM GST APL-04 (for orders under Sections 107 and 108).
- Rectification Only for Specific ITC Issues: The rectification will apply solely to the demand concerning ITC wrongly availed due to contraventions of sub-section (4) of Section 16, now allowable under sub-sections (5) or (6) of the same section.
Ensuring Compliance and Fairness
This rectification process is particularly beneficial for taxpayers who have not yet filed an appeal against the orders confirming the wrongful availment of ITC. Importantly, if the rectification leads to an adverse effect on the taxpayer, the authority must follow the principles of natural justice, ensuring a fair process.
The notification, effective from October 10, 2024, is expected to provide relief to businesses by allowing them to rectify past mistakes related to ITC availment without undergoing lengthy legal proceedings.
For taxpayers, especially those with complex input tax credit claims, this is a crucial opportunity to align their GST records and avoid penalties. It is advisable for businesses to consult with their tax advisors and take prompt action within the stipulated six-month window.
Official copy of the notification has been attached
CAclubindia
