Ground-2: Excess Availment of Input Tax Credit under IGST Act (GSTR-2A vs. GSTR-3B) -1

[Shambhavi Nayak]

The Allegation: Upon verification of the books of accounts read with statutory returns Form GSTR-9 and Form GSTR-9C for the financial year 2021-22, it is observed that the Taxpayer has availed Input Tax Credit (ITC) under the IGST head amounting to Rs. 4,41,33,614.82, which is in excess of the auto-populated amount of Rs. 4,39,16,096.91 reflected in Form GSTR-2A (net of credit notes). It is pertinent to note that the records do not indicate any ITC brought forward from the preceding financial year, confirming that the subject claim pertains exclusively to transactions within FY 2021-22. Consequently, the discrepancy of Rs. 2,17,517.91 constitutes an excess claim availed in direct contravention of the provisions of Section 16 of the GST Acts. Accordingly, the SCN proposed the recovery of Rs. 2,17,517.91 along with interest.

Reply of the Taxpayer: The Taxpayer filed replies to the Show Cause Notice, including a submission dated 18-12-2025, contending the following: a. That they have followed Form GSTR-2B for availment of credit, which they claim is the correct basis. b. That the discrepancy in GSTR-2A arises because certain suppliers failed to report sales in GSTR-1 or reported them belatedly, and Credit Notes were issued by some dealers in 'April 2024' (appears to be a typographical error for 'April-2021') c. They relied on the judgment of the Hon'ble High Court of Orissa in M/s Raaas Corporate Service Pvt Ltd vs State of Odisha to argue that demand cannot be raised solely on mismatches. d. That they maintain a closing balance of Rs. 4,60,342/- in their Electronic Credit Ledger, and therefore, the demand is not sustainable.

AI Summary

Input Tax Credit mismatch can prompt recovery when claimed credit exceeds supplier reported records; taxpayer disputes relying on GSTR 2B. The notice alleges excess availment of Input Tax Credit under the IGST head for FY 2021-22 because the taxpayer's claimed ITC exceeds the auto populated amount in Form GSTR 2A, invoking Section 16 and proposing recovery with interest. The taxpayer contends entitlement based on Form GSTR 2B, blames supplier non reporting and belated credit notes for the mismatch, cites judicial authority limiting demands based on mismatches, and refers to a positive closing balance in the Electronic Credit Ledger to challenge the sustainability of the demand.