Input tax credit

[Vasudev Mehta]

Dear experts,

My case is that a CA of the client had inadvertently shown more tax payable in GSTR-3B as compared to GSTR-1 by Rs 18,00,000. This is evident by the report at the gst website. Ideally the that CA should adjust the amount in the sales column. However, in order to rectify the amount he showed the same as input tax credit in the third month. Now there is a difference of rs 18 lakhs in GSTR-2A and GSTR-3B since such amount will not appear in GSTR-2A. It is clearly a rectification of outward liability and not input tax credit taken. The department is demanding reversal of input tax credit along with interest. Is it a good case to argue? Are there any case laws to refer?

AI Summary

Input tax credit misclassification can trigger reversal with interest; consider refund claim, reversal with interest, or clerical-error defence.
A taxpayer recorded an excess tax payment as input tax credit in a subsequent GSTR-3B instead of reducing output liability; the revenue treats this as wrongful ITC availment and demands reversal with interest. Recommended responses include claiming a refund if timely, reversing ITC and paying interest (with possible penalty exposure), or presenting the matter as a clerical error to the authority emphasizing no revenue loss.