CBIC has vide its Circular No. 193/05/2023-GST dated 17th July, 2023 has issued clarification to deal with difference in Input Tax Credit (ITC) availed in FORM GSTR-3B as compared to that detailed in FORM GSTR-2A for the period 01.04.2019 to 31.12.2021. The clarifications given in said Circular are briefly explained as under:
ITC Mismatches for period 01.04.2019 to 08.10.2019
Since rule 36(4) came into effect from 09.10.2019 only, the guidelines provided by Circular No. 183/15/2022-GST dated 27th December, 2022 shall be applicable, in toto, for the period from 01.04.2019 to 08.10.2019.
The procedure provided in above Circular is given below and 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 section 16(4) of CGST Act.
In order to verify the condition of Section 16 (2)(c) 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.
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 applicable for period till 08.10.2019).
ITC mismatches for period 09.10.2019 to 31.12.2019
During this period Rule 36(4) of CGST Rules permitted availment of Input tax credit by a registered person in respect of invoices or debit notes, the details of which have not been furnished by the suppliers under sub-section (1) of section 37, in FORM GSTR-1 or using IFF to the extent not exceeding 20% of the
eligible credit available in respect of invoices or debit notes, the details of which have been
furnished by the suppliers under section 37(1) in FORM GSTR-1 or using IFF.
Accordingly, the guidelines provided by Circular No. 183/15/2022-GST dated 27th December, 2022 shall be applicable for verification of the condition of Section 16(2)(c) of CGST Act for the said period, subject to the condition that availment of Input tax credit by the registered person in respect of invoices or debit notes, the details of which have not been furnished by the suppliers under sub-section (1) of section 37, in FORM GSTR-1 or using IFF shall not exceed 20% of the eligible credit available in respect of invoices or
debit notes the details of which have been furnished by the suppliers under section 37(1) in FORM GSTR-1 or using IFF. Registered person will not be allowed to avail ITC in excess of 20% of the eligible ITC.
ITC availed in FORM GSTR-3B in excess of that available in FORM GSTR-2A up to 20% can be allowed subject to production of the requisite certificates as per Circular No. 183/15/2022-GST dated 27.12.2022.
ITC mismatches for period 01.01.2020 to 31.12.2020
Similarly, for the period from 01.01.2020 to 31.12.2020, when rule 36(4) of CGST Rules allowed additional credit to the tune of 10% in excess of the that reported by the suppliers in their FORM GSTR-1 or IFF, the guidelines provided by Circular No. 183/15/2022-GST dated 27th December, 2022 shall be applicable, for verification of the condition of Section 16(2)(c) of CGST Act for the said period, subject to the condition that availment of Input tax credit by the registered person in respect of invoices or debit notes, the details of which have not been furnished by the suppliers under section 37(1), in FORM GSTR-1 or using the IFF shall not exceed 10% of the eligible credit available in respect of invoices or debit notes the details of which have been furnished by the suppliers under section 37(1) in FORM GSTR-1 or using the IFF.
ITC mismatches for period 01.01.2021 to 31.12.2021
Further, for the period from 01.01.2021 to 31.12.2021, when rule 36(4) of CGST Rules allowed additional credit to the tune of 5% in excess of that reported by the suppliers in their FORM GSTR-1 or IFF, the guidelines provided by Circular No. 183/15/2022-GST dated 27th December, 2022 shall be applicable, for verification of the condition of Section 16(2)(c) of CGST Act for the said period, subject to the condition that availment of Input tax credit by the registered person in respect of invoices or debit notes, the details of which have not been furnished by the suppliers under section 37(1), in FORM GSTR-1 or using the IFF shall not exceed 5% of the eligible credit available in respect of invoices or debit notes the details of which have been furnished by the suppliers under section 37(1) in FORM GSTR-1 or using the IFF.
ITC mismatches for period 01.01.2022 onwards
It is further clarified that consequent to insertion of clause (aa) to section 16(2) of the CGST Act and amendment of rule 36(4) of CGST Rules w.e.f. 01.01.2022, no ITC shall be allowed for the period 01.01.2022 onwards in respect of a supply unless the same is reported by his suppliers in their FORM GSTR-1 or using IFF and is communicated to the said registered person in FORM GSTR-2B.
These instructions will apply only to the ongoing proceedings in scrutiny/ audit/ investigation, etc. for the period 01.04.2019 to 31.12.2021 and not to the completed proceedings. However, these instructions will apply in those cases during the period 01.04.2019 to 31.12.2021 where any adjudication or appeal proceedings are still pending.
READ / DOWNLOAD CIRCULAR: CLICK HERE
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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.
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