rule 36(4)

[sumanta nayak]

If any one taken excess ITC allowed under rule 36(4),but the same invoice uploaded after due date then need reply of the following querries:

1.If he has to reverse ?

2.If yes then how to claim ITC again ?

3.If he has not reversed ,whether the same available at time of scrutiny ?

[Rajagopalan Ranganathan]

Sir,

Rule 34 (4) of CGST Rules, 2017 stipulates that " Input tax credit to be availed by a registered person in resis in possession of valid invoice issued by the supplierpect of invoices or debit notes, the details of which have not been 5[furnished] by the suppliers under sub-section (1) of section 37 [in FORM GSTR-1 or using the invoice furnishing facility], shall not exceed 5 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been furnished by the suppliers under sub-section (1) of section 37 6[in FORM GSTR-1 or using the invoice furnishing facility]..

Therefore if any excess credit exceeding 5% limit is taken the same should be reversed with interest. However you can take credit whenever the supplier upload the invoice in subsequent months. However this provision is under challenge on the ground that when recipient is in possession of valid invoice issued by the supplier under rule 46 of CGST Rules, 2017 the Department cannot deny the credit. The picture will be clear only when the courts pronounce their verdict on this matter

[sumanta nayak]

Please reply on point no 3

[Shilpi Jain]

The answer to your query will depend on the period to which the invoice pertains. Pls have a look at this article

https://www.taxtmi.com/article/detailed?id=9746

[Rajagopalan Ranganathan]

Sir,

If the department finds out the mistake at the time of scrutiny, the department will recover the excess credit availed along with interest and will impose penalty also under section 122 or 123 as the case may be.

[Shilpi Jain]

If it is for the period prior to Oct '19 for sure nothing can be asked by the department and even if they ask it is surely contestable. For the period after this until the Finance Act 2021 comes into effect amending section 16(2) it is still contestable.

[Sandeep Garg]

Clause (aa) to sub section (2) of Section 16 was inserted by the Finance Act, 2021. Before that section 36(4) has no validity. The GOI recognized this facts and made amendment in section 16.

Following is the insertion:

5[(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37;]

AI Summary

Input tax credit entitlement limited where supplier filings are pending; excess must be reversed and may be reclaimed later. Excess ITC claimed where supplier details were not furnished is limited by a 5% threshold; excess must be reversed with interest, and may be reclaimed when the supplier later uploads the invoice. Recovery on scrutiny can include interest and penalties. The position was contested for periods before Oct 2019 and until the Finance Act, 2021 amendment, which inserted a requirement in section 16(2) that supplier outward supply details be filed and communicated to the recipient before ITC can be claimed.