In 50th GST Council meeting held yesterday amongst several recommendations one is in regard to procedure for verification of input tax credit in cases involving difference in input tax credit availed in GSTR-3B vis a vis that available as per FORM GSTR-2A.
Para 9 of the Press Release dated 11th July, 2023 reads as under:
As per the recommendations of the Council in its 48th meeting, Circular No. 183/15/2022-GST dated 27th December, 2022 was issued to provide for the procedure for verification of input tax credit in cases involving difference in Input Tax Credit availed in FORM GSTR-3B vis a vis that available as per FORM GSTR-2A during FY 2017-18 and 2018-19. To provide further relief to the taxpayers, the Council recommended for further issuance of a circular to provide for similar procedure for verification of input tax credit in cases involving difference in Input Tax Credit availed in FORM GSTR-3B vis a vis that available as per FORM GSTR-2A during the period 01.04.2019 to 31.12.2021.
Thus as per GST Council the procedure as was earlier provided vide Circular No. 183/15/2022-GST dated 27th December, 2022 in respect of ITC mismatches for FY 2017-18 and 2018-19 is also recommended to be applied for the ITC mismatches for the period 01.04.2019 to 31.12.2021.
For ready reference of our readers the procedure provided vide Circular dated 27th December, 2022 is given below. The procedure is applicable in cases of ITC mismatches in the following situations:
- Where the supplier has failed to file GSTR-1 for a tax period but has filed return in FORM GSTR-3B.
- Where supplier has filed GSTR-1 and GSTR-3B , but has failed to report a particular supply.
- Supplier has wrongly reported a B2B supply as B2C supply in GSTR-1.
- Supplier has declared supply with wrong GSTIN of recipient in GSTR-1. In this case in addition to procedure given in suceeding paras, the proper officer of the actual recipient shall intimate the concerned jurisdictional tax authority of the registered person, whose GSTIN has been mentioned wrongly, that ITC on those transactions is required to be disallowed, if claimed by such recipients in their FORM GSTR-3B. However, allowance of ITC to the actual recipient shall not depend on the completion of the action by the tax authority of such registered person, whose GSTIN has been mentioned wrongly, and such action will be pursued as an independent action
The proper officer shall first seek the details from the registered person regarding all the invoices on which ITC has been availed by the registered person in his FORM GSTR-3B but which are not reflecting in his FORM GSTR-2A. He shall then ascertain fulfilment of the following conditions of Section 16 of CGST Act in respect of the input tax credit availed on such invoices by the said registered person:
(i) that he is in possession of a tax invoice or debit note issued by the supplier or such other tax paying documents;
(ii) that he has received the goods or services or both;
(iii) that he has made payment for the amount towards the value of supply, along with tax payable thereon, to the supplier.
Besides, the proper officer shall also check whether any reversal of input tax credit is required to be made in accordance with section 17 or section 18 of CGST Act and also whether the said input tax credit has been availed within the time period specified under sub-section (4) of section 16 of CGST Act.
In order to verify the condition of clause (c) of sub-section (2) of Section 16 of CGST Act that tax on the said supply has been paid by the supplier, the following action may be taken by the proper officer:
In case, where difference between the ITC claimed in FORM GSTR-3B and that available in FORM GSTR-2A of the registered person in respect of a supplier for the said financial year exceeds Rs. 5 lakhs, the proper officer shall ask the registered person to produce a certificate for the concerned supplier from the Chartered Accountant (CA) or the Cost Accountant (CMA), certifying that supplies in respect of the said invoices of supplier have actually been made by the supplier to the said registered person and the tax on such supplies has been paid by the said supplier in his return in FORM GSTR-3B. Certificate issued by CA or CMA shall contain UDIN. UDIN of the certificate issued by CAs can be verified from ICAI website https://udin.icai.org/search-udin and that issued by CMAs can be verified from ICMAI website https://eicmai.in/udin/VerifyUDIN.aspx .
In cases, where difference between the ITC claimed in FORM GSTR-3B and that available in FORM GSTR-2A of the registered person in respect of a supplier for the said financial year is upto Rs. 5 lakh, the proper officer shall ask the claimant to produce a certificate from the concerned supplier to the effect that said supplies have actually been made by him to the said registered person and the tax on said supplies has been paid by the said supplier in his return in FORM GSTR-3B.
However, it may be noted that for the period FY 2017-18, as per proviso to section 16(4) of CGST Act, the aforesaid relaxations shall not be applicable to the claim of ITC made in the FORM GSTR-3B return filed after the due date of furnishing return for the month of September, 2018 till the due date of furnishing return for March, 2019, if supplier had not furnished details of the said supply in his FORM GSTR-1 till the due date of furnishing FORM GSTR-1 for the month of March, 2019.
It may also be noted that the clarifications given hereunder are case specific and are applicable to the bona fide errors committed in reporting during FYs 2017-18 and 2018-19. (Now will also apply for period 01.04.2019 to 31.12.2021).
Further, these guidelines are clarificatory in nature and may be applied as per the actual facts and circumstances of each case and shall not be used in the interpretation of the provisions of law.
These instructions will apply only to the ongoing proceedings in scrutiny/audit/ investigation, etc. for FYs 2017-18 and 2018-19 and not to the completed proceedings. However, these instructions will apply in those cases for FYs 2017-18 and 2018-19 where any adjudication or appeal proceedings are still pending. Now for above para period 01.04.2019 to 31.12.2021 shall also be included as per latest GST Council recommendation for which a new circular shall be issued).
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
