Adjustment of Excess claimed IGST ITC from Short claimed CGST and SGST

[POOJA AGARWAL]

Dear Experts

One of the client has taken excess IGST ITC due to clerical error. At the same time he has claimed lesser CGST & SGST ITC due to clerical error. The department has issued SCN demanding Excess claimed ITC

Whether the assesee may take a plea that the demand of IGST ITC excess claimed may be set off against lesser claimed CGST & SGST ITCs'. Any case law, or sections that may help?

[Shilpi Jain]

That plea can be taken. Though this will find favour at the Tribunal stage only.

Also what is the period of the demand? 

Since it is revenue neutral, one can also take a stand that extended period of limitation will not apply ie section 74 will not be applicable for the demand issued.

[POOJA AGARWAL]

Thanks Shilpi

The demand has been raised u/s 73 only.

[Amit Agrawal]

Just because a tax-payer had failed to avail ITC against one or more particular inward supplies, it cannot be justification against availing excess ITC against all-together inward different supplies, IMHO. Such situation cannot be called as revenue-neutral situation in my view. 

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

[VENU K]

I would like to know the opinion of experts on the following assuming notice is on the basis of 2A and 3B difference

I feel in such situations it is necessary to look at the allegations made by the department. Most probably they will invoke violation of Sec 16(2)(c) and the evidence canvassed being difference between 2A and 3B.

In such cases you can challenge the SCN on the ground that there is no violation of Sec 16(2)(c) and SCN was issued on the basis of inadequate investigation , assumptions etc and if the department were alleging violation of supplier having failed to pay tax the department should have identified the supplier and must have tried to collect tax from him in the first instance...

In my opinion the allegation in SCN by department should be claiming credit of a non existing supply under Sec 16(2)(b) and the eligibility to credit has been lost due to Sec 16(4) time limit.

But generally they invoke violation of Sec 16(2)(c) in many such cases because they wont be able to identify the exact cause easily without a thorough reconciliation which is very unlikely.

[Padmanathan KV]

I agree with Sri. Venu Ji. This defence can be taken too.

[KASTURI SETHI]

Q. Whether the assesee may take a plea that the demand of IGST ITC excess claimed may be set off against lesser claimed CGST & SGST ITCs ?

Ans. NO. Proper procedure has to be followed. Excess credit  taken has to be paid back. 

AI Summary

Excess IGST ITC set-off against short CGST/SGST is contested; repayment procedure and input credit defences govern the dispute Whether excess IGST ITC may be offset against under claimed CGST and SGST is disputed: some advise a set off plea as revenue neutral and contest limitation, while others insist excess credit must be repaid through prescribed procedure. Recommended defences include challenging the departmental reconciliation and invoking input tax credit eligibility and time limit grounds; however, the prevailing practical position presented is that proper procedural reversal is required rather than unilateral set off.