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 month-wise 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 prior-period 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.

 

[KASTURI SETHI]

A query is incomplete without a specific question at the end of the query.

AI Summary

Input tax credit reconciliation under GST and Rule 36(4) governs reliance on GSTR-2B, GSTR-2A, and GSTR-3B. Excess availment of input tax credit is examined against GSTR-2B, GSTR-2A and GSTR-3B. The taxpayer's reliance on GSTR-2B is stated to be untenable where the claim includes ineligible prior-period credits and no month-wise reconciliation is furnished to show compliance with the applicable statutory tolerance limit up to December 2021. The analysis also notes that prior-period credit appearing in GSTR-2B was not supported by documentary evidence, while Rule 36(4) restricted credit on missing invoices to 5% of eligible credit reflected in GSTR-2A.