Wrongly Reverse ITC

[Uttam Giri]

In GSTR 3B Wrongly Reverse ITC in Table 4(b)(1) in place of 4(b)(2). Now GST department sens a notice. So what is implications for wrongly filling GSTR 3B?

[KALLESHAMURTHY MURTHY K.N.]

Sir,

If the department insists on reversal due to ineligible ITC availed, you are required to reverse it. But not required to pay interest since ITC is already with the department. You can apply for a refund for entries in the wrong col. subject to other conditions and restrictions.

 As per recent changes, Col. 4(B)(1) is for ITC not liable to reclaim. 

[Shilpi Jain]

Need further details on this. What is the period when this reversal was done.

Why was it to be done as a temporary reversal, goods not recieved or anything else?

What does the dept notice state? 

[Shilpi Jain]

Anyway note that the disclosure requirements are mentioned in a circular and not stipulated in the rules.

[Uttam Giri]

Dear Madam,

Already filled GSTR Annual return also, we are reversed the ITC permanently instead of temporarily reversed table. And same we reclaimed on subsequent months when it is realised in our books of accounts. So, GSTR department says after showing in table 4(b)(1), you can not reclaimed.Now what will be the penalty and the implications? 

[KALLESHAMURTHY MURTHY K.N.]

Sir, 

The Assessing Authority or the Adjudication Authority should have determined the liability to reversal of ITC to be reported in Table 4(B)(1) with the documents and books of accounts. Just because of entries in the wrong col., it cannot be treated as such. It is a human error and is liable to a refund. In respect of the actual liability to be reported in actual col. (but not reported because of wrong entries), the AA may demand the reversal of ITC  with applicable interest and penalty. However, as the amount has already been deposited, interest & penalty may not be payable.

AI Summary

Wrongly reversed input tax credit can be corrected or refunded, but authorities may demand reversal with interest and penalty.
Wrongful reporting of input tax credit in the incorrect GSTR 3B column can trigger departmental notices; taxpayers must reverse ineligible ITC, may apply for refund or adjustment for amounts reported or deposited in error, and rely on disclosure guidance in circulars. Assessing authorities should determine substantive liability from records; misclassification as a human error can allow correction, whereas a finding of ineligibility may lead to demands for reversal with interest and penalties, though already deposited amounts may mitigate interest and penalty liability.