Gujrat HC notice on limiting ITC to state and center:
Gujrat high court has issued the notices to the state and center on limiting ITC. In a recent development, a rule called 36(4) was introduced into CGST rules. The impact of this rule is very widespread. A dealer in GST will be able to take the ITC only if it is reflected in 2A od the taxpayer.
An additional amount of 20% can also be taken. But in many cases the supplier file GSTR 1 quarterly. They can make the ITC reflect in 2A before a quarter. This will make a huge hardship, on the third month ITC will reflect but liability is already paid in cash. No refund will be allowed and this ITC will be utilized in the coming quarter only.
We are hoping that some resolution will be there. Taxpayers especially MSME taxpayers are in a mess. It is a challenge for survival. As big companies will stop purchase from small suppliers.
Related Topic:
Gujarat HC in the case of Cosmo Films Limited Versus Union of India
