regarding ITC reversal as per rul 42 & 43

[FARIDUDDIN AHMAD]

sir one of my client received notice u/s 73 to reverse the ITC of Rs-1,92,409.66/-(SGST+CGST) as per the provisions of rule 42 & 43 on the exempt sale of fire wood amounting Rs-11,96,250/- generated during the process of manufacturing of VINEER PATTA. he is registerd in GST as manufacturing unit. nature of bussiness is manufacturing of VINEER PATTA (Finished Goods) which attracts 18% GST. rae material required to manufacture finished goods are woods.ITC availed through GSTR 3B are eligible ITC for manufacturing of finished goods. kindly advise rule 42 & 43 is applicable in this case for reversal of ITC

AI Summary

Client Challenged with Reversal of Rs. 1,92,409.66 ITC Under GST Rules 42 & 43 Due to Exempt Sales A client received a notice to reverse Input Tax Credit (ITC) of Rs. 1,92,409.66 under GST rules 42 and 43 due to exempt sales of firewood during the manufacturing of vineer patta, which attracts 18% GST. Experts in the forum agree that ITC must be reversed for exempt supplies, but emphasize ensuring accurate calculations and identifying expenses related solely to taxable supplies to avoid incorrect reversals. Concerns were raised about the notice amount appearing excessive, suggesting a review of invoice-level details to determine if full credit can be claimed for exclusively taxable supplies.