Supplier charged higher GST rate

[SHARAD ANADA]

Mr A purchase goods from Mr. B. GST rate of goods is 12% but Mr. Charged 18%. Can Mr. A take ITC of 18%?

Is there any case law?

[Ganeshan Kalyani]

In my view, yes the ITC of the tax paid @ 18% can be claimed.

[KASTURI SETHI]

In this scenario, A is not safe in the eyes of law. Rather, the supplier is also subject to penalty. No person can collect and pay tax on his own volition. Tax (whatever kind of tax may be) has to be paid as per law and proper procedure has to be followed.. Instead of tracing out case law, better option is that the supplier should issue credit note to the buyer and seek refund of that amount of tax from the department.

In pre-GST regime, SCNs were issued to the person who availed such credit. Even in the GST regime also, under Section 155 of CGST Act, the burden of proof is cast upon the person who avails ITC. This very section would suffice to issue SCNs to both the persons i.e. the supplier and the buyer.

So why to invite trouble unnecessarily ?

[Himansu Sekhar]

He can take ITC @12% even though the language in Section 16 is :

(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.

Here charged means: mentioned in the Tariff

[KASTURI SETHI]

Sh.Himanshu Shekhar Ji,

Yes. I add as under "Here charged means mentioned in tariff" but read with relevant notification either reducing the rate mentioned in tariff or granting exemption from the rate of tax mentioned in tariff.

AI Summary

Input tax credit entitlement limited to statutory rate; buyer should seek supplier credit note or refund remedy. A purchaser charged a higher GST rate than tariff raises whether he may claim input tax credit for tax actually paid. Competing views appear: one permits credit of tax paid as invoiced; the other stresses that entitlement to Input Tax Credit is limited by statutory conditions, places the burden of proof on the claimant, and advises correction by the supplier through a credit note and refund to avoid departmental action.