ITC utilisation

[Madhavan iyengar]

while compiling data for filing GSTR-9

a) if we have noticed any ITC credit wrongly taken can we reverse the ITC in May 19 or June 19 3B or later also or this ITC is required to be paid in cash suppose during audit also some reversals have to be done then can it not be done thru balance ITC available in electronic ledger

b) In case any additional liability arises on account of outward supplies can it be discharged through ITC or it has to be paid in cash

Fundamental issue:

In GSTR-9 form they have specified that we have to pay cash to clear liability but is there no provision in act since ITC is a inherent right to discharge GST liability the GST liability can be discharged thru ITC or ITC and balance thru cash where ITC is not sufficient

Govt gets the tax on output liability so why they are insisting for cash payment

readers kindly enlighten

[KASTURI SETHI]

Dear Sh.Madhavan Iyengar Ji,

There is a logical force in your argument. ITC should be allowed to be paid through Electronic Credit Ledger instead of cash through Form DRC-03, especially, in view of having sufficient balance of ITC in the assessee's account but as per Notification No.74/18-CT dated 31.12.18 (serial no.9 above Table No.17) it is mandatory to pay additional liability in cash via Form DRC-03.

AI Summary

Input Tax Credit usage restricted: additional GST liabilities must be paid in cash via prescribed payment procedure despite available ITC. Whether taxpayers may use Input Tax Credit to discharge additional GST liabilities identified on filing or audit is the core issue. Although ITC conceptually discharges output tax, Notification No.74/18-CT requires that additional liabilities be paid in cash through the prescribed payment process (Form DRC-03), preventing use of the electronic credit ledger to clear such liabilities.