🧾 When ITC Appears Lost in GSTR-9… But Isn’t!

Bhagya Lakshmi
5 days ago
2 min read

How invoices received in the next FY can still keep your Input Tax Credit safe

In the fast-moving world of GST compliance, it’s easy to panic when the GSTR-9 doesn’t show the ITC you expected. Especially when the portal shows “ITC Lapsed” and the finance team is on edge. But before you write it off from your books, let’s explore a scenario where ITC isn’t really lost—it’s just postponed.

📌 The Common Scenario:

Your vendor raised an invoice dated March 31, 2023.You received the goods/services and the invoice in April 2023, i.e., FY 2023–24.You booked the expense and claimed ITC in April’s GSTR-3B.But when filing GSTR-9 for FY 2022–23, the system shows that ITC is lapsed. Sound familiar?

🔍 What Actually Happened?

Here’s the truth:

As per Section 16(2) of the CGST Act, ITC can only be availed after receipt of goods or services AND possession of the tax invoice.
Since you received both in April 2023, you were right to claim the credit in FY 2023–24.
GSTR-9 compares expenses based on invoice dates, not when you actually received them.

So while the system might appear to show ITC as lapsed for FY 2022–23, it’s actually just a mismatch due to timing, not a loss of credit.

⚖️ What Do Courts Say?

Let’s anchor this with judicial reasoning:

1. Arora & Co. v. Union of India (Delhi HC, 2023):

GSTR-9 is a summary return. Errors in it cannot deny eligible ITC if it’s correctly claimed in GSTR-3B.

2. Bharti Airtel Ltd. v. Union of India (Delhi HC):

When GST system limitations cause underreporting, substantive ITC rights should prevail over procedural hurdles.

🛡️ Practical Takeaway:

Don’t panic if GSTR-9 shows a lapse. First check when the invoice was received.
If received in the next FY, and you claimed it in time (before September return or annual return—whichever is earlier), you're within the law.
Keep documentation: delivery challans, email receipts, booking entries.
Reconcile GSTR-2B and books on a monthly basis to avoid future surprises.

💡 Final Thought:

GST compliance is as much about timing as it is about accuracy. Knowing the law, especially around Section 16, can turn “lapsed” credits into legally claimed ones.