FY 2021-22 ITC EXCESS CLAIMED SUPPLIER NOT FILLED IN GSTR-1

[DURAI RAJ]

You have availed excess ITC in GSTR-3B as compared to the tax declared by your suppliers in their GSTR-1 DRC-01 Notice how we have claimed ITC Based on  Available purchase bills how to rectify this notice

[Sadanand Bulbule]

At the outset, proper reconciliation between GSTR-3B & GSTR-2A/2B is required to double check the facts. Despite If you have wrongfully utilised excess ITC, then it should be reversed along with interest under Section 50[3] of the Act. Alternatively, if it is the fault of the supplier but you have valid documentation, you may argue for leniency. Lawful ITC cannot be disallowed.

 

[Shilpi Jain]

Query not very clear. Also period of dispute not mentinoed.

[Harshaditya Kabra]

Section 16(2)(c) Compliance Challenge

The core issue lies in Section 16(2)(c) of the CGST Act, which requires that "tax charged in respect of supply has been actually paid to the government by the supplier". However, several High Court judgments have provided relief to genuine taxpayers in similar situations:

Favorable Legal Precedents:

• Bharat Aluminium Company Ltd. v. Union of India (2024 (5) TMI 258 - CHHATTISGARH HIGH COURT): ITC cannot be denied solely because seller didnt upload invoices timely

[Sadanand Bulbule]

2025 (6) TMI 116 - ALLAHABAD HIGH COURT - M/s R.T. Infotech Versus Additional Commissioner Grade 2 And 2 Others

AI Summary

Excess ITC Claims Must Be Reversed Under Section 50(3) Unless Valid Documents Prove Eligibility A taxpayer claimed excess input tax credit (ITC) in GSTR-3B compared to the supplier's declared tax in GSTR-1, triggering a DRC-01 notice. The issue requires reconciliation between GSTR-3B and GSTR-2A/2B to verify accuracy. If excess ITC was wrongly claimed, it must be reversed with interest under Section 50(3) of the CGST Act. However, if the supplier failed to file but the recipient has valid documentation, courts have provided relief, recognizing that lawful ITC should not be denied solely due to supplier non-compliance. Section 16(2)(c) mandates that tax must be paid by the supplier for ITC eligibility, but judicial precedents, including a High Court ruling, have favored genuine taxpayers in such disputes.