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

[Shambhavi Nayak]

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.

d. Submission of Books vs GSTR-2A:

AI Summary

Input tax credit mismatch under GST depends on reconciliation, supplier verification, and the Rule 36(4) tolerance limit.
Excess input tax credit under the GST framework must be assessed against the statutory restrictions for the relevant period, including the 5% tolerance under Rule 36(4) up to December 2021. Reliance on GSTR-2B is insufficient where it contains prior-period or otherwise ineligible credits, and the taxpayer must provide month-wise reconciliation and documentary support to show that the claim remained within the permissible limit. In the absence of such reconciliation, the excess ITC claim remains unsubstantiated.