TaxTMI 
TaxTMI 
Hello,
Can penal provisions of section 74A be invoked if ineligible ITC which department deems as bogus ITC is claimed and reversed in same month in GSTR-3B ?
Thanks in advance.
Ineligible ITC claimed and reversed- 74A
15 Mar 2025 
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Ineligible input tax credit may not attract enhanced fraud penalty if reversed before utilisation, subject to intent and reporting rules.
Ineligible ITC claimed but reversed in the same period generally does not attract the enhanced fraud penalty where the credit was not utilised; case law favours that such penalties are unsustainable absent utilisation and revenue loss. However, culpable intent or attempts to mislead may engage other penal or prosecutorial provisions, and taxpayers remain subject to the procedural requirement to first declare and then reverse ITC through the prescribed return mechanism. (AI Summary)
Ineligible ITC claimed but reversed in the same period generally does not attract the enhanced fraud penalty where the credit was not utilised; case law favours that such penalties are unsustainable absent utilisation and revenue loss. However, culpable intent or attempts to mislead may engage other penal or prosecutorial provisions, and taxpayers remain subject to the procedural requirement to first declare and then reverse ITC through the prescribed return mechanism. (AI Summary)