ITC Excess Claimed but No Revenue Loss to Government (FY 2019–20)

[Tushar Malik]

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!

AI Summary

Excess Input Tax Credit: reversal with interest and procedural refund required; absence of fraud may mitigate penalty exposure.
Excess claim of Input Tax Credit must be reversed with interest if utilized, and any excess tax paid should be pursued by refund through proper procedure; an offsetting excess payment does not substitute for required reversal. Invocation of fraud-targeted provisions can be contested where there is no fraudulent intent or gross negligence, but the taxpayer carries the burden of proof to establish entitlement and procedural compliance. Procedural correction, documentary evidence, and demonstrating absence of revenue loss may mitigate penalty exposure though relief depends on strict adherence to statutory processes.