GST on ITC reversal recovered from supplier

[Kaustubh Karandikar]

XYZ availed input tax credit on goods supplied by the supplier. However, details of the corresponding tax invoice were not getting reflected on the GST portal under Return GSTR – 2A / 2B. Therefore, XYZ reversed the input tax credit and the amount of input tax credit reversed was recovered from the supplier through debit note. Is XYZ required to pay GST on the amount recovered from the supplier?

AI Summary

XYZ Reverses ITC Due to Missing Tax Invoice; Debate on GST Applicability for Recovered Amount via Debit Note XYZ reversed its input tax credit (ITC) on goods supplied due to the absence of the corresponding tax invoice on the GST portal. The reversed ITC amount was recovered from the supplier via a debit note. A query was raised about whether GST is applicable on the recovered amount. One response suggested that the recovery is a reduction in purchase value, not income, hence GST is not applicable. Another response indicated that the debit note issued by XYZ is not valid under GST law, as only suppliers can issue such notes, and the transaction is merely a price reduction.