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

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.