TaxTMI 
TaxTMI 
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
regarding ITC reversal as per rul 42 & 43
01 Nov 2023 
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ITC reversal for exempt supplies under rule 42/43 may apply where inputs serve both taxable and exempt outputs.
Apportionment rules require reversal of Input Tax Credit when inputs are common to both taxable and exempt supplies; credits exclusively attributable to taxable supplies may be retained in full. Taxpayers should perform invoice-level allocation and apply the prescribed apportionment formula carefully to avoid improper blanket reversals by authorities. (AI Summary)
Apportionment rules require reversal of Input Tax Credit when inputs are common to both taxable and exempt supplies; credits exclusively attributable to taxable supplies may be retained in full. Taxpayers should perform invoice-level allocation and apply the prescribed apportionment formula carefully to avoid improper blanket reversals by authorities. (AI Summary)