On October 8, 2024, the Central Government issued Notification No. 22/2024-CT, introducing a special procedure for taxpayers to rectify demand orders related to the wrongful availment of Input Tax Credit (ITC) under the Central Goods and Services Tax (CGST) Act, 2017. This notification addresses situations where ITC was previously denied due to non-compliance with Section 16(4) but has become permissible under the newly inserted Sections 16(5) and 16(6).

Understanding the Relevant Sections:

  • Section 16(4): This section stipulates a time limit for availing ITC, disallowing claims for any invoice or debit note after the 30th day of November following the end of the financial year to which such invoice or debit note pertains, or the date of filing the relevant annual return, whichever is earlier.

  • Sections 16(5) and 16(6): Introduced through the Finance (No. 2) Act, 2024, these subsections provide relief by allowing ITC claims in specific circumstances beyond the time limits set in Section 16(4). Section 16(5) pertains to late filing of returns by regular taxpayers, while Section 16(6) addresses cases where a taxpayer’s registration was canceled under Section 29 but later restored under Section 30.

Procedure for Rectification:

Taxpayers who have received demand orders confirming the wrongful availment of ITC due to contraventions of Section 16(4), but who are now eligible to claim such ITC under Sections 16(5) or 16(6), can apply for rectification of these orders. The application must be filed electronically on the GST portal within six months from the date of issuance of Notification No. 22/2024-CT, i.e., by April 7, 2025.

Implementation and Functionality:

As of January 2025, the GST portal has been updated to enable the filing of rectification applications in accordance with Notification No. 22/2024-CT. This functionality allows taxpayers to submit applications electronically, facilitating the correction of demand orders where ITC is now admissible under the updated provisions.

Steps to File a Rectification Application:

  1. Access the GST Portal: Log in to the official GST portal using your credentials.

  2. Navigate to the Rectification Application: Go to the ‘Services’ tab, select ‘User Services,’ and then choose ‘Application for Rectification.’

  3. Fill in the Required Details: Provide necessary information, including the original order reference, details of the ITC involved, and justification for rectification based on the provisions of Sections 16(5) or 16(6).

  4. Upload Supporting Documents: Attach relevant documents supporting your claim, such as copies of the original order, invoices, and any correspondence related to the demand.

  5. Submit the Application: Review the information provided, and upon confirmation, submit the application electronically.

  6. Acknowledgment: After submission, an acknowledgment receipt with a unique reference number will be generated for future tracking.

Taxpayers are advised to ensure that applications are filed within the stipulated timeframe and that all requisite information and documentation are accurately provided to facilitate prompt processing by the tax authorities.