GST on 3B and 2A difference year 2022-23

[KS Bhat]

RTP has received notice for the period ITC claimed is 300000 and ITC available is 100000 rs On verification it is found 1 party has supplied goods in the month of June 2022 is declared in B to C instead of B to B Total Payment is through Bank transection only and obtained certificate from supplier . Can RTP get relief

[KALLESHAMURTHY MURTHY K.N.]

Sir,

Please refer to the case law - WPA 1611 of 2022 T.M.C. - HI - TECH. Versus Assistant Commissioner State GST, Cooch Behar Charge & Ors. - 2022 (7) TMI 604 - CALCUTTA HIGH COURT of HIGH COURT, CALCUTTA for judgment for a similar issue. Produce outward supply invoice and register of the supplier and tax admitted in GSTR-3B for the respective month before the concerned authority, and request to allow correction of relevant returns by the supplier accordingly.

[Piyush Choudhary]

One of the mandatory prevailing conditions for availing ITC under section 16(2)is that the tax charged in respect of the supply must be actually reflected in the recipient's GSTR-2B / GSTR-2A which in turn depends upon correct reporting by the supplier in GSTR-1 as B2B.

In your case, the supplier has reported the transaction as B2C instead of B2B for June 2022. Due to this incorrect classification, the ITC does not get auto populated in GSTR-2B resulting in non fulfilment of a statutory condition. Mere payment through banking channels and obtaining a confirmation or certificate from the supplier though evidentiary in nature, cannot substitute statutory compliance.

The tax officer is bound by the provisions of the Act, CBIC circulars and internal instructions which consistently emphasize that ITC eligibility is linked to reflection in GSTR-2B. Hence, discretionary relief at the adjudication stage is unlikely.

Further, appellate authorities, including GSTAT, generally do not grant relief where a clear statutory condition is not met, especially when the lapse pertains to incorrect return filing by the supplier and not merely a procedural defect.

Therefore, unless the supplier rectifies the error by amending GSTR-1 (if legally permissible for the relevant period) and the ITC consequently reflects in GSTR-2B, the probability of relief is remote. Request to approach HC to give direction to allow GST amendment.

[KASTURI SETHI]

Relief is possible only after rectification of GSTR-1 filed by the supplier. After rectification of GSTR-1, file reply to the Show Cause Notice taking shelter of High Court judgement as advised by. Sh.Kalleshamurthy Murthy, Sir.

[Shilpi Jain]

Get a CA certificate/declaration from the supplier that the tax has been paid but there has been an error in the disclosure in the returns. This should get you relief at the Tribunal stage

[KALLESHAMURTHY MURTHY K.N.]

Obtaining a CA Certificate, as suggested by Shilpi Madam, is an additional documentary evidence that could help with the issue.

[Pinnacle Tax Advisor]

Rule 36(4) was amended to mandate matching ITC with GSTR-2B/2A effective from 01/01/2022. Since your supplier reported the transaction under B2C, the ITC did not appear in GSTR-2B/2A. Based on my experience, it is unlikely that relief will be granted at the adjudication authority or first appellate authority stage.

AI Summary

Input tax credit mismatch due to B2C reporting instead of B2B raises GSTR-2B compliance concerns.
Input tax credit claimed against invoices not reflected in GSTR-2B/GSTR-2A because the supplier reported the supply as B2C instead of B2B. The discussion states that Rule 36(4) required ITC matching with the auto-populated statement and that correct supplier reporting in GSTR-1 is necessary to satisfy section 16(2); bank payment and a supplier certificate are evidentiary only and do not replace statutory compliance. Rectification of the supplier's GSTR-1 is indicated as the practical step so the transaction may reflect in GSTR-2B.