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Clarification by CBIC on Dealing with ITC Differences Between GSTR-3B & 2A

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Aakanksha Singhal
Aakanksha Singhal

Published on: Jan 19, 2023

Shweta Khandelwal
Shweta Khandelwal

Updated on: Jan 20, 2023

★★★★★(23 Ratings)
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Background:

During the initial period of implementation of GST, i.e., FY 2017-18 and 2018-19, in many cases, the suppliers failed to furnish the correct details of outward supplies in their Form GSTR-1 for such financial years, which led to certain deficiencies or discrepancies in Form GSTR-2A of their recipients. Moreover, the concerned recipients might have availed input tax credit (ITC) on the said supplies in their returns in Form GSTR-3B. The Tax Officers are noticing such discrepancies during the proceedings undertaken by them since the credit was not flowing to Form GSTR-2A of the said registered persons. Such discrepancies are considered as ineligible ITC availed by the registered persons and are being flagged seeking explanation from the registered persons for such discrepancies and/or for reversal of such ineligible ITC.

However, the taxpayers have cited the following difficulties faced by them in respect of discrepancies so noticed:

  1. Form GSTR-2A could not be made available to the taxpayers on the common portal during the initial stages of implementation of GST
  2. Restrictions regarding availment of ITC by the registered persons up to certain specified limit beyond the ITC available as per Form GSTR-2A were provided under rule 36(4) (Documentary requirements and conditions for claiming input tax credit) of Central Goods and Services Tax Rules, 2017 only with effect from 9th October 2019
  3. But, the availability of ITC was subjected to restrictions and conditions specified in Section 16 (Eligibility and conditions for taking input tax credit) of Central Goods and Services Tax Act, 2017 from 1st July, 2017 itself

In view of the various representations so received from the trade as well as the tax authorities, seeking clarification regarding the manner of dealing with such discrepancies between the amount of ITC availed by the registered persons in their Form GSTR-3B and the amount as available in their Form GSTR-2A during FY 2017-18 and FY 2018-19, the Central Board of Indirect Taxes and Customs (CBIC) has issued clarifications to this effect on December 27, 2022.

Clarifications Issued:

S. No. Scenario Clarification
1. The supplier has failed to file Form GSTR-1 for a tax period but has filed Form GSTR-3B for the said tax period, due to which the supplies made in the said tax period is not getting reflected in Form GSTR-2A of the recipients The difference in ITC claimed by the registered person in Form GSTR-3B and that available in Form GSTR-2A may be handled as per the procedure laid below the table.
2. The supplier has filed Form GSTR-1 as well as Form GSTR-3B for a tax period, but has failed to report a particular supply in Form GSTR-1, due to which the said supply is not getting reflected in Form GSTR-2A of the recipient
3. The supplier has wrongly reported the supplies made to registered persons with a Tax invoice as B2C supply, instead of B2B supply, in his Form GSTR-1, due to which the said supply is not getting reflected in Form GSTR-2A of the said registered person
4. The supplier has filed Form GSTR-1 as well as Form GSTR-3B for a tax period, but he has declared the supply with wrong GSTIN of the recipient in Form GSTR-1
  • The difference in ITC claimed by the registered person in Form GSTR-3B and that available in Form GSTR-2A may be handled as per the procedure laid below the table.
  • Additionally, 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.

Procedure for Handling Differences in ITC Claimed:

The Proper Officer shall follow the below stated procedure for handling the differences in ITC claimed by the registered person in Form GSTR-3B and that available in Form GSTR-2A:

S.No. Steps to be Followed Detailed Information
1. Ascertain the condition fulfillment under Section 16 of the CGST Act
  • Details in respect of 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 shall be sought by such persons.
  • Ascertain fulfillment 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:
    • possession of a tax invoice or debit note issued by the supplier or such other tax paying documents
    • goods or services or both have been received or not
    • payment for the amount towards the value of supply, along with tax payable thereon, has been made to the supplier or not.
2. Reversal of Input Tax Credit (ITC), if required Check the following:
  • Requirement of any reversal of input tax credit (ITC) to be made in accordance with section 17 (Apportionment of credit and blocked credits) or section 18 (Availability of credit in special circumstances) of CGST Act and
  • Whether the said input tax credit (ITC) has been availed by the thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.
3. Verifying the Payment of tax so charged on supplies to the Government
  • In case the 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, then such person is required to furnish a certificate for the concerned supplier from the Chartered Accountant (CA) or the Cost Accountant (CMA), certifying the following:
    • 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.
    • Such certificate issued by CA or CMA shall contain UDIN which 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 case, the 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 up to Rs. 5 lakhs, then the claimant is required to produce a certificate from the concerned supplier ratifying the following:
    • the 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.

Note:

  1. In terms of the provisions of proviso to Section 16(4) of the CGST Act, for the period of FY 2017-18, the aforesaid relaxations shall not be applicable to the claim of ITC made in Form GSTR-3B which was 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 the supplier had not furnished the 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.
  2. The clarifications given in the CBIC Circular (Ref: 183/15/2022-GST, dated: 27.12.2022) are case specific and are applicable to the bonafide errors committed in reporting during the FY 2017-18 and 2018-19.
  3. These instructions will apply only to the ongoing proceedings in scrutiny/audit/ investigation, etc. for the FY 2017-18 and 2018-19 and not to the completed proceedings but, will apply in those cases for FY 2017-18 and 2018-19 where any adjudication or appeal proceedings are still pending.

Disclaimer

The information provided in this article is intended for general informational purposes only and should not be construed as legal advice. The content of this article is not intended to create and receipt of it does not constitute any relationship. Readers should not act upon this information without seeking professional legal counsel.

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