ITC claimed in wrong head

[JAIMIN MODI]

What to do if i had claimed ITC of import goods in the head of all other ITC??

[Alkesh Jani]

Shri

If you have availed IGST under head all other ITC, just intimate the department regarding this, as you are eligible for ITC on imports. Other wise may reverse the same and avail the same in proper head.

Thanks

[JAIMIN MODI]

Dear sir,

if i reverse ITC from all the ITC head to Import Good ITC,is there any Interest Liability attracted???

[Alkesh Jani]

Shri,

As the query was general in nature the reply was given accordingly. Please provide details then proper reply may be given.

Thanks

[JAIMIN MODI]

Dear sir,

In the month of Aug 2019 there is Total IGST ITC of ₹ 3200000 out of which 2100000 is for import of goods and remaining 1100000 is for other purpose IGST ITC

In Aug 2019 month GSTR 3B i forget to classify the IGST ITC in there proper head and take all the IGST ITC in the head of all other itc

and presently i got to know that i had not classified ITC for Aug month, so i want to rectify the same as per there proper head and as you suggest if i reverse itc from all other head and claim the same in import goods in the month of Feb 2020 GSTR 3B, so is there any interest liability is attaracted as the rectification is of the month of Aug 2019.

[KASTURI SETHI]

You have not caused any loss of revenue to the Govt. The Supreme Court has held that interest is always compensatory in nature. This is a procedural lapse. Interest is not chargeable but you will have to get rectified from the department. GSTR 3B return has to be defreezed for rectification. So you will have to see your jurisdictional GST Range Officer for this purpose. Rectification is possible only with the help of Range Officer or Deputy Commissioner, In-charge of Division.

At present there is provision to not charge interest if payment of tax is made under IGST instead of CGST/SGST under Section 77 but as per legal position interest is chargeable for availment of credit under wrong type of tax.

So make efforts. I hope your problem will be solved. You cannot keep it pending for ever. Get it rectified as early as possible. It is rectifiable.

AI Summary

Input tax credit misclassification may require departmental rectification and could attract interest depending on revenue impact.
Misclassification of Input Tax Credit in GSTR 3B should be rectified by intimating the department and obtaining defreezing of the return via the jurisdictional Range Officer or Deputy Commissioner so the credit can be reversed and reclassified under the proper import goods head. Although the lapse is procedural and interest is compensatory where no revenue loss occurs, the legal position remains that interest may be chargeable for availment of credit under a wrong tax head, subject to the limited statutory exception when tax is paid under IGST instead of CGST/SGST.