Input Tax Credit is available when it gets reflected in GSTR-2A/2B of the recipient. In this Article we are going to discuss when a taxpayer can avail the Input Tax Credit when it is not reflecting in his GSTR-2A/2B and what is the procedure to avail the same. Before we proceed further, we would like to clarify that the below procedure is applicable only for the financial year 2017-2018 & 2018-2019.
During the Inception period of GST era due to reason like supplier has not reported the details of supplies made in their GSTR-1 or reported but reported wrongly which has led to certain deficiencies or discrepancies in FORM GSTR-2A of their recipients. The Concerned recipient has availed the ITC whiling filing Form GSTR 3B however same is not reflecting in GSTR-2A.
The Section 16 of Central Goods and Services Tax Act, 2017 provides for eligibility and conditions for availing Input Tax Credit (ITC) and ITC can be availed by the registered person with respect to the amount the credit of which is reflecting in electronic credit ledger of such person, besides other conditions.
The Mismatch of ITC claimed in GSTR-3B and ITC reflecting in Form GSTR-2A noticed by GST officer during various stage of proceeding like Scrutiny, GST audit, investigation etc & notices has been issued by the department. This mismatch of ITC is treated as ineligible ITC availed by registered person & explanation has been asked by the officer for such discrepancies and in most cases reversal of ITC along with interest & penalty.
Here the important thing is that the form GSTR- 2A could not be made available to taxpayer on the common portal during initial stages of implementation of GST. However, the availability of ITC was subjected to restrictions and conditions specified in Section 16 of CGST Act from 1st July 2017 itself.
There can be below 4 possible scenarios for Mismatch of ITC claimed in GSTR 3B & GSTR-2A
1) GSTR-1 Not Filled: – GSTR-1 of particular month has not been filled by the supplier however he has filled GSTR-3B of that month and paid the applicable tax for that particular month. Due to this the ITC is not flowing into the GSTR-2A of the recipient for said period.
2) Failed to report Transaction: – supplier has filed FORM GSTR-1 as well as return in 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 does not get reflected in FORM GSTR-2A of the recipient.
3) Wrong reporting of B2B supply as B2C supply: – supplies were made to a registered person and invoice is issued as per Rule 46 of CGST Rules containing GSTIN of the recipient, but supplier has wrongly reported the said supply as B2C supply, instead of B2B supply, in his FORM GSTR-1, due to which the said supply does not get reflected in FORM GSTR-2A of the said registered person.
4) Wrong GSTN of recipient: – Where the supplier has filed FORM GSTR-1 as well as return in FORM GSTR-3B for a tax period, but he has declared the supply with wrong GSTIN of the recipient in FORM GSTR-1.
Procedure to be followed to claim Mismatch ITC
First of all taxpayers should prepare the details of all the invoices on which ITC has been availed while filing GSTR-3B and which are not reflecting in GSTR-2A.
Secondly all the condition mentioned in section 16 of CGST Act,(except 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), in respect of the input tax credit availed on such invoices by the said registered person are fulfilled:
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 taxpayer shall also confirm 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.
The proper officer will check that the above-mentioned procedures are followed properly.
To avail the Input Tax Credit condition of clause (c) of sub-section (2) of Section 16 of CGST Act needs to be fulfilled i.e. The tax charged in respect to the supply has been actually paid to the Government. As the ITC is not reflecting in 2A so the proper office may take following action depending on mismatch amount:
i) Difference between the ITC during the Financial Year Exceeds 5 Lacs :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 lakh, 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.
ii) Difference between the ITC during the Financial Year up to Rs 5 Lacs : 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.
Pint to Remember:
i) The above procedure is applicable only for ITC difference for the financial year 2017-18 and 2018-19 with respect of Bonafede mistake committed during such year.
ii) 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.
iii) This procedure will apply only to the ongoing proceedings in scrutiny/audit/ investigation, etc. for FY 2017-18 and 2018-19 and not to the completed proceedings.
iv) This procedure will apply in those cases for FY 2017-18 and 2018-19 where any adjudication or appeal proceedings are still pending
Source: – The above article is based on the Circular No. 183/15/2022-GST, Dated the 27th December, 2022.
Disclaimer: The above article is prepared for understanding & study purpose. We recommend you consult your CA or tax consultant before taking any decision & author will not be responsible for any lose due to decision take based on above article.
About Author: Author is Practicing Chartered Accountant and founder of D Rahul & Associates, Navi Mumbai. You can reach Author at ca.rahuldwivedi@gmail.com or 9004485377.
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