Supplier has reversed the ITC of invoice after receiving payment.

[SANJEEV AGGARWAL]

One of my supplier supplied a material in June, 2021 for which total payment was made within 3 days. The supplier duly uploaded the invoice in June, 21 GSTR-1 & ITC was duly availed in our June GSTR-2A. Only one invoice transaction took place with him. In july, 2021 when we were matching our GSTR-2A, we were shocked that he has reversed ITC vide Credit Note although no Credit Note was given to us & no eway bill is there against that credit Note. He has not even filed GSTR-3B for month of June, 2021. This seems to be a fraud on us. Now what is the remedy available to us. Whether any criminal complaint can be filed against him so as to set an example for others. Kindly advise.

[KASTURI SETHI]

You want to teach a lesson to your supplier with an intent to set an example for others. In my view, try to resolve the dispute amicably. If you resort to police action against the supplier, you will lose more money, time and energy. You will earn tension. Peace of mind is more important than teaching a lesson any person.

In future, select your supplier carefully. This is right approach.

[Shilpi Jain]

Have u cross checked first with the supplier why a credit note is shown in ur GSTR-2A. This is just to ensure that no error has happened at his end while filing returns.

If no proper response from him consider writing to his and your jurisdiction officer regarding the details of this. This is to ensure that the dept gets a chance to follow up with vendor before asking u to reverse credit. This will also be a good defense for u.

[KASTURI SETHI]

It is a dispute between the seller and buyer. The department will intervene/reacts only if the supplier has evaded GST and any person lodges a complaint with the department with documentary evidence against the evader.

AI Summary

Input Tax Credit reversal after supplier credit note may require dispute resolution or departmental complaint for tax evasion. A purchaser found a supplier had reversed Input Tax Credit by filing a credit note despite timely payment and the original invoice being uploaded; advised steps are to verify with the supplier for possible filing error, preserve documentary evidence, notify the jurisdictional tax officer so the department can follow up, and consider lodging a complaint only where there is credible indication of GST evasion.