Dear Members,
One of our clients by mistake claimed more ITC in FY 2019–20, but at the same time, he also paid extra tax in GSTR-3B compared to GSTR-1 for the same period. So, there is no loss to the government, and there was no bad intention behind it.
We are in the process of replying to a Show Cause Notice issued under Section 74 of the CGST Act.
If anyone has dealt with a similar case or has any relevant High Court/Tribunal judgments supporting the view that penalty should not be imposed where there is no revenue loss and no fraud, please share.
Thanks in advance!
Taxpayer faces Section 74 notice for excess ITC claim despite paying extra GST with no net revenue loss A taxpayer mistakenly claimed excess input tax credit (ITC) in FY 2019-20 while simultaneously paying extra GST in GSTR-3B compared to GSTR-1 for the same period, resulting in no net revenue loss to the government. The taxpayer received a show cause notice under Section 74 of CGST Act and sought advice on avoiding penalties where no revenue loss or fraud occurred. Forum members advised that excess ITC and excess GST payment are separate issues requiring proper procedural handling - ITC must be reversed with interest and refund claimed for excess tax paid. Members noted Section 74 requires fraud or willful misstatement, and suggested arguing excess payment should be treated as ITC reversal. However, experts cautioned that departments typically don't accept such self-adjustments, emphasizing the burden of proof lies with the taxpayer under Section 155 of CGST Act. (AI Summary)
TaxTMI 
TaxTMI 
