Input tax credit claimed on the basis input credit wrongly entered

[mathur ramachandran]

Unutilsed Input credit of previous month was again wrongly entered in 3B return of the subsequent month under the Table input claim resulting in duplication. This sort of error has occured on two other occasions as well. The GST due for each month has been paid in cash.Since such accumulated input credit is available in the credit ledger, the GST liability had to be squared off first against such credit thereby the credit in the cash ledger remained unutilised. However, As at the end of Sep-19 return there is no liabilty for GST, Upto the end of Sep-19 return, the credits in various ledgers are as follows- Balance IN CASH LEDGER:is Credit 245596 -Balance in CREDIT LEDGER is Credit 188699 -AGGREGATE of wrong input claim is as at the end of Sep 19 return is 434295 - NOW in the GST 3B return for October-19, I am proposing to reverse the excess input of 434295 which will make the balance in the CREDIT ledger Dr 245596 and which will in turn offset the credit of 244596 in the cash ledger.- Kindly advise whether the step or procedure adopted to rectify the aforesaid errors is correct - If not, can you kindly advise the alternate procedure

Thanking you,

Ca M S ramachandran

[SIVARAMA KUMAR]

Since your GSTR 3B liability gets offsetted firstly from the ITC and then in cash, it would amount to Utilisation of wrong credit, though you have a surplus cash balance in your cash ledger (Department will view like that) Hence it would be appropriate to pay the amount in cash ₹ 4,34,295/- in the month of October 19 and reverse the same under ineligible ITC , this would help you to minimise the litigations. when availment itself is wrong, reversal cannot be justified.

AI Summary

Wrong input tax credit duplication should be rectified by cash payment and reversal as ineligible ITC. The taxpayer duplicated previously unused input tax credit in later GST 3B returns, producing an excess credit balance in the credit ledger while the cash ledger held a surplus. The advisor recommends paying the equivalent amount in cash in the subsequent month and recording a reversal under ineligible ITC because the department treats such duplication as utilisation of wrong credit, and reversal without cash payment may not be justified.