Wrong input credit availed

[KrishnaKumar A]

Hi All,

One of my client availed CGST and SGST input credit instead of IGST credit during the FY 2017-18. This was found out during the finalization of GST audit. Is there anyway to regularise the same? My understanding is that the time period to avail IGST credit was 31st March 2019 for the FY 2017-18. Again the assessee has to reverse CGST and SGST credit while filing GSTR 9 for the FY 2017-18 and pay tax by way of DRC-3, am I correct? This will end up in loosing IGST credit. Is there a way to save this credit?

[KASTURI SETHI]

Read Section 54 (8) (d) and Section 77 of CGST Act. There should be no problem for refund of IGST by way of credit in Electronic Credit Ledger.

[Pavan Mahulkar]

As per Section 77 of CGST Act.

Supplier who has wrongly collected Tax and paid the same is eligible to claim refund..

Here the recepient of the supply who has availed the ITC under wrong Act

May not claim the refund under section 77

[KASTURI SETHI]

I agree with Ms. Pavan Mahulkar. It is Section 54 (8) (e) and NOT (d). I am grateful to her for pointing out my error.

(e) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person; or

Only solution is refund of credit of IGST into Electronic Credit Ledger.It is a technical lapse and substantive right cannot be denied or forfeited on this ground. There is a plethora of case laws on this issue. The assessee would not suffer such loss.

Refund of credit of IGST cannot be denied/disallowed inasmuch as there is no difference between tax and ITC. Tax paid character is the same whether paid through Credit or in cash. It is a fact that reversal of credit of CGST & SGST and tax paid through DRC-03 in cash has resulted in excess payment to Govt's kitty.

Also go through this case law

2019 (5) TMI 1009 - KERALA HIGH COURT GIREESH BABU ALAMBADAN VERSUS THE STATE TAX OFFICER, STATE GST DEPARTMENT, COMMISSIONER OF STATE GST, DEPARTMENT OF STATE GST, THIRUVANANTHAPURAM AND UNION OF INDIA, REPRESENTED BY SECRETARY, NEW DELHI

[Pavan Mahulkar]

कस्तुरी sir, I am Mr.Pavan not Ms.

[KASTURI SETHI]

Dear Sh.Pavan Ji,

Sorry pl.

[KrishnaKumar A]

Thank you all, certainly it is a helpful case decision. Thank you.

[KASTURI SETHI]

Also see latest case law reported as 2020 (1) TMI 833-Jharkhand High Court in the case Shree Nanak Ferro Alloys Vs. UOI.

AI Summary

Refund of IGST credit available to rectify wrong input classification and restore credit via Electronic Credit Ledger.
Recipient wrongly availed CGST and SGST instead of IGST; remedy is to reverse the CGST/SGST credits in returns and pursue refund of the IGST amount into the Electronic Credit Ledger under the statutory refund provision Section 54(8)(e), noting that Section 77 chiefly governs supplier refunds and that authorities and case law treat such classification errors as technical, not extinguishing substantive credit rights.