i have both sales and purchase from one party. i have maintained 2 ledgers for Purchase and Sales. We always have Receivalbe from this party.
Even though Se maintain a net 'Debit balance' (meaning more receivables than payables) with this party overall, the GST departments query focuses on specific credit balances (your payables) that have exceeded the 180-day limit.
GST department challenges input tax credit reversal under section 37 for credit balances exceeding 180 days despite net debit position A taxpayer maintains separate purchase and sales ledgers for transactions with the same party, resulting in an overall net debit balance but specific credit balances exceeding 180 days. The GST department queries credit balances surpassing the 180-day limit for input tax credit reversal under section 37. Legal experts suggest using departmental circulars allowing netting off of supply invoices against trade receivables in audited accounts to avoid showing credits over 180 days. However, departments typically reject arguments about net debit positions, with relief potentially available only through First Appellate Authority or Tribunal proceedings. (AI Summary)
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