A taxpayer paid entire output tax liability through ITC. During scrutiny, it was found that Rule 86B applied, requiring part payment in cash. The taxpayer has now paid the required amount in cash.
Can the ITC earlier utilized (now effectively replaced by cash) be refunded or re-credited to the Electronic Credit Ledger?
If refundable, will the two-year limitation under Section 54 be counted from the date of cash payment or from the date of original GSTR-3B filing (FY 2022-23)?
Taxpayer may claim refund or re-credit of ITC replaced by cash under Rule 86B; Section 54 limitation runs from payment. A taxpayer who discharged output tax entirely using input tax credit but later paid the shortfall in cash under Rule 86B may claim refund or re-credit of the ITC that was effectively replaced by cash as an excess tax payment; the two-year limitation for refund under Section 54 runs from the date of actual tax payment, not from the date of the original GSTR-3B filing. Where the excess arose due to scrutiny or related litigation, the two-year period is measured from the payment made in connection with that scrutiny. (AI Summary)
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