REVERSAL OF IGST ITC AND PAYMENT THROUGH DRC 03

[SANTOSH PATIL]

Sir,

I have a query one client has received ASMT 10 wherein department has asked clarification of IGST differance amount of 125000 between GSTR 3B and 2A of F.Y. 2017-18. After verification we found accountant has erroneously taken IGST excess to the extent 125000 in IGST Column. Now while reversing and making payment through DRC 03 it is asking state name against IGST. Just wanted to know which state to select since it was erroneously taken and also use of DRC 03 is correct challen. your valuable guidence will help us to proceed further.

Thanks in Advance

[KASTURI SETHI]

Sh.Santosh Patil Ji,

You should reverse in GSTR-3B in Table 4 against serial no. B (2)--Others under the column meant for IGST and NOT via Form GST DRC-03. Form GST DRC-03 is the last resort. Thus Common Portal System will not ask for the name of State. The department is concerned with reversal along with interest. It is not necessary that you should pay through Form GST DRC-03. Since Form GST ASMT-10 has already been issued, whether to accept explanation or not, is discretion of the Proper Officer as per Rule 99 (3) of CGST Rules. If reversal is made through Form GSTR 3 B, it will not have adverse effect.

[Amit Agrawal]

My views:

A. Return in Form GSTR-3B cannot be used now for paying against wrongly availed ITC in FY 2017-18.

B. Form DRC-03 should be used for paying subject liability.

C. Place of supply (POS) should be 'the state/union territory' where you are registered, while paying against wrongly availed ITC under the head of 'IGST'.

These are ex facie views of mine and the same should not be construed as professional advice/suggestion.

[GUNASEKARAN K]

The taxpayer is required to pay the tax amount mentioned in GST ASMT-10 along with interest and penalty.

Payment must be done through Form DRC-03. While making payment, the assessee should select the correct section (ITC Mismatch - GSTR 2A/2B to GSTR 3B for your case)

Amount payable in GST DRC-03 can be paid through ITC or in cash.

Also need to file reply in Form GST ASMT-11 that amount mentioned in GST ASMT-10 has been paid along with copy of GST DRC-03.

The state must be same as state registered by the assessee.

[GUNASEKARAN K]

In continuation to above reply;

The Proper Officer will issue an order under GST ASMT-12 that reply is found satisfactory and corresponding proceedings have been dropped.

[Ganeshan Kalyani]

In one of the case the department has accepted the reversal of excess claimed input tax credit through GSTR 3B.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

Pl. post the case law here.

[KASTURI SETHI]

Both modes of payment are legally valid and correct inasmuch as both are prescribed in CGST Act/Rules. The major difference between the two modes is that in DRC-03 no separate intimation is required to be given to the Proper Officer whereas if payment or reversal is made through GSTR 3 B via Electronic Credit Ledger and Electronic Cash Ledger, separate intimation is required to be given as proof of payment.

Moreover, DRC-03 mode of payment is more convenient for the purpose of Audit, Adjudication, Inspection etc.

 

[Amit Agrawal]

In continuation of my post earliest post at serial No. 2 above, please note the restrictions put u/s 39 (9) of the CGST Act, 2017 which reads as under:

"¹¹[Where] any registered person after furnishing a return under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (4) or sub-section (5) discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars ⁵[in such form and manner as may be perscribed], subject to payment of interest under this Act:

Provided that no such rectification of any omission or incorrect particulars shall be allowed after ¹²[the thirtieth day of November] following ⁶[the end of the financial year to which such details pertain], or the actual date of furnishing of relevant annual return, whichever is earlier."

These are ex facie views of mine and the same should not be construed as professional advice/suggestion.

[KUMAR Narasimhan]

Dear Amit Sir,

So, you mean to say that in case of IGST tax incorrectly taken, in the case of POS is unknown we can use the respective state of GST registration of the tax payer?

[Amit Agrawal]

Dear Shri Kumar Narasimhan,

If tax-payer takes ITC against IGST, this is with the understanding that the place of underlying supply is the place where such tax-payer is registered. In other words, If tax-payer takes ITC against IGST, it is with the understanding that state / UT where such tax-payer is registered, has got underlying tax-revenue in form of IGST.

For subject query under discussion here, tax-payer has taken ITC of IGST even though there was no underlying inter-supply involving place of supply as that of registered place of the tax-payer. In other words, place of supply has not got revenue in form of IGST even though tax-payer has taken credit against non-existent supply at place of his registration.

Hence, I have suggested to show the place of supply (POS) as 'the state/union territory' where the tax-payer is registered, while paying against wrongly availed ITC under the head of 'IGST'.

These are ex facie views of mine and the same should not be construed as professional advice/suggestion.

[Padmanathan KV]

I had opportunity to discuss this matter at great length with Amit ji. He has done extensive research on the same and I fully agree with his views.

[KUMAR Narasimhan]

Dear Sir,

Thank you so much for giving me more clarity on this Subject.

[Gaurav Gupta]

What should be the Place of Supply for IGST payment, where there is difference in GSTR-1 and GSTR-3B, and the short tax paid in R-3B is not identifiable.

AI Summary

Reversal of wrongly availed IGST credit: reverse in GSTR-3B where allowed or pay via DRC-03 selecting registered state as POS.
When wrongly availed IGST credit is discovered, a taxpayer may either reverse the credit in FORM GSTR-3B (Table 4, IGST column) where permitted and timely, or pay tax, interest and penalty through FORM GST DRC-03; DRC-03 creates a direct payment record and avoids separate intimation to the proper officer. If paying under IGST in DRC-03 where place of underlying supply is not identifiable, select the state/union territory of the taxpayer's registration. Rectification is subject to the time limit in section 39(9) and acceptance by the proper officer remains discretionary.