Purchase Omissions in GSTR 3B

[BDO India Services Private Limited]

Hi all,Greetings of the day!!

One of our client has got 3 notices for 'Purchase Omissions in GSTR 3B'.The officer is contending that our client has not taken ITC on a purchases which are appearing in GSTR 2A.This is a scenario where the ITC in 2A is more than 3B.Can anyone help as to how do we reply to such notices?...Any provision in the law in this regard?

[Ganeshan Kalyani]

Sir, all the amount appearing in GSTR 2A may not be eligible credit. There could be credits that are blocked u/s 17(5) of CGST Act. So, the taxpayer has to analyze the eligibility and also match it with his books to ensure the invoice is booked. There could goods-in-transit case , where supplier has raised invoice on last day of the month and dispatch the goods and customer received it in next month. Like these there could be various scenarios which need to be checked before arriving at eligible credit. And these facts can be written on the reply to be drafted for submission to the department.

[KASTURI SETHI]

I concur with the views of Sh.Ganeshan Kalyani Ji. Nicely explained.

[Alkesh Jani]

Shri

In agreement to the views expressed by our experts, I just wish to add that Section 16 reads as follow:-

"Every registered person shall, ........, 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".

from plain reading we can conclude that it talks of "Eligibility" to take the ITC, even remotely it does not suggest compulsion to take ITC. To avail ITC or to forego it is the right of the assessee. You may add this ground if you feel appropriate. If this kind of notice is issued it is really very surprising.

Thanks

[Shilpi Jain]

Agree with the experts. Also, It must be an auto generated notice. Why would the department be bothered if assessee has not availed any itc? It's become e so easy for department to throw notices to all.

Would the assessee be required to reply to these letters or run his business?

[BDO India Services Private Limited]

Thank you so much all!!

This was really helpful,would try my best to incorporate all the suggestions in the reply.

[ABHISHEK TRIPATHI]

So, the notice is to show cause that why the registered person has not taken ITC?

May you please tell, what department is proposing in such case? Barring such ITC or asking Tax, Interest or Penalty? What end will such show cause meet.

AI Summary

Input tax credit mismatch requires taxpayer to verify eligibility and explain discrepancies in filing promptly with documentation. Notices where GSTR 2A shows higher ITC than GSTR 3B require taxpayers to determine eligibility before claiming: some credits are blocked, invoices may not be booked, or goods may be in transit, so receipt and claim fall in different periods. The taxpayer should reconcile supplier data with books, identify ineligible items, and submit a factual explanation with supporting documentation stating why the GSTR 2A amounts were not taken in GSTR 3B.