Reversal of ITC - Not reported in Table 4 (B)(2) of GSTR-3B

[Shri Sasikumar]

Dear Experts,

During FY 2018-2019, the company has wrongly availed certain ITC and the same was noticed in the subsequent year 2019-2020 - May 2019 3B and voluntarily reversed it. Such reversal was reported in GSTR-3B, by netting off from All Other ITC of May 2019 eligible ITC, instead of reporting in Table 4 (B)(2). While filing Annual Return in GSTR-9 for the FY 2018-2019, the auditor also reported this reversl in Part V of Entry 12 and calculated the interest and paid via DRC-03.

Now the GST Officer deny the reversal for the reason that it was not reported in Table 4 (B)(2) of GSTR-3B and demands tax, interest and penalty.

Please advise how to respond to this notice.

Thanks.

[KASTURI SETHI]

It is a clerical error. Where is revenue loss ? In this scenario, tax and interest cannot be demanded. No question of imposition of penalty. There are case laws on the issue of minor procedural lapses in favour of tax payers. CBIC has also issued instructions.

[Raam Srinivasan Swaminathan Kalpathi]

Dear Querist

Foremost, for some sage advise. Henceforth, kindly use Challan Form DRC-03 to reverse any erroneously availed ITC of the previous year. Please refrain from set off against the current year's ITC. Also, in the event of a reversal of ITC, you may also consider intimating your jurisdictional superintendent at that point of time.

Secondly, this is purely technical lapse. Nevertheless, in my experience, department officials do not take these technical inadvertances lightly. You may present your case with detailed explanations during the PH.

[KASTURI SETHI]

I wholly agree with the reply Sh.Kalpathi, Sir.

The issue is worth winning with the support of case laws and Board's circular.

Tax/duty cannot be charged twice. However, the burden of proof is cast upon the party under Section 155 of CGST Act.

[KALLESHAMURTHY MURTHY K.N.]

Sir,

It is purely a clerical error. Not reporting in a particular column does not prevent the payment from being recorded, and the department cannot create demand based on the reason that it was not reported in Table 4 (B)(2). It is not a charging section. Any demand on this basis is without liability and legal force. Taxes must not be collected twice, as mentioned by Sri Kasturi Sethi Ji, and it is a good suggestion by Sri Kalpathi Sir to make payments through DRC-03.

[KASTURI SETHI]

"To correct clerical mistake is a fundamental right to do the business. The department also commits" ----Supreme Court in the case of CBIC Vs. Abedare Technologies Pvt. Ltd. Order dated 21.3.2025. CWP 6990 of 2025

[Raam Srinivasan Swaminathan Kalpathi]

During PH, I would request the querist to enumerate the ITC which was found ineligible and reversed in 3B in the subsequent year with reasons thereof. Also, you may produce the ledger extracts which would confirm the reversals in the books of account in the subsequent year. Further you may also consider taking a CA certificate confirming the above facts. A detailed submission emphasising the tax neutrality of the technical lapse, with affidavit confirming the same would add weightage to your case.

Lastly, before submitting, please note to ensure that all the amounts are congruent to one another.

AI Summary

Input tax credit reversal: technical reporting lapse in GSTR-3B should be supported with records and proper reconciliation. Reversal of wrongly availed input tax credit under GST was discussed where the reversal was made in a subsequent period, reflected in GSTR-9, and interest was paid through DRC-03, but it was not reported in Table 4(B)(2) of GSTR-3B. The discussion treated the issue as a clerical or technical lapse and stressed that a demand should not rest only on the reporting mismatch when the reversal is otherwise recorded in the books and supported by return disclosures. It also highlighted the need for ledger extracts, CA certification, and a detailed submission to establish the reversal.