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

[Shambhavi Nayak]

iii. Analysis and Findings: I have carefully considered the submissions made by the Taxpayer and the records available on file. The point-wise findings are as follows: a. On Reliance on GSTR-2B vs. Statutory Restrictions: The Taxpayer's defence relying on Form GSTR-2B is factually and legally untenable for the period in dispute. While they contend that they relied on Form GSTR-2B, the verification reveals that their claim includes ineligible prior-period credits. Consequently, the Taxpayer has neither strictly adhered to GSTR-2B (for the current period data) nor have they furnished any monthwise reconciliation to demonstrate that the excess ITC was within the statutory tolerance limit of 5% prescribed under Rule 36(4) for the period up to December 2021. In the absence of such reconciliation, the excess claim remains unsubstantiated under any provision of the law. b. Factual Error: A scrutiny of the GSTR-2B of April-2021 reveals that the GSTR-2B figures relied upon by the Taxpayer include ITC amounting to Rs. 4,65,418.49 which pertains to the previous financial year (2020-21). The Taxpayer has failed to provide any documentary evidence to substantiate the transition or eligibility of this priorperiod credit in the current year. c. Legal Position: For the majority of FY 2021-22 (up to 31.12.2021), the availment of ITC was governed by Rule 36(4) of the CGST Rules, 2017. This rule explicitly restricted ITC on missing invoices to a maximum of 5% of the eligible credit found in GSTR-2A. The Taxpayer cannot bypass this statutory cap by selectively relying on GSTR-2B figures that contain ineligible prior-period data.

AI Summary

Input Tax Credit cap under Rule 36(4) bars relying on GSTR-2B to claim ineligible prior period credits. The taxpayer's reliance on GSTR-2B is unsustainable because claimed Input Tax Credit includes ineligible prior period amounts and no monthwise reconciliation was produced to demonstrate compliance with the statutory tolerance under Rule 36(4). GSTR-2B for April 2021 records credit attributable to the prior financial year, which the taxpayer failed to substantiate, and therefore cannot be used to circumvent the statutory cap on missing invoice ITC for the period in question.