Claim of ITC-CGST/SGST instead of IGST, Goods and Services Tax - GST

[ROHIT GOEL]

In FY 2017-18, Supplier A based in Haryana received goods from Delhi on which IGST was charged. However, by mistake, accountant punched credit as SGST and CGST in GSTR-3B and credit was adjusted in same month with outward liability.

The error remained undetected while filing GSTR-9 and was only detected after GST Deptt has issued SCN due to mismatch of ITC in GSTR-3B and GSTR-2A.

What are the recourse available to assessee now as same was only an inadvertent error and no loss to revenue was caused as in FY 2017-18 inter-head adjustment was allowed freely without restrictions and therefore even if ITC was taken currently as IGST, then also it would have been adjusted against monthly output liability in same manner.

I am aware that there is existing law as well as Court decisions which allow assessee to take refund of wrongly paid tax and pay the correct tax however there is no such provision or judgment regarding incorrect claim of ITC under wrong head. Kindly provide your views.

Posts / Replies

[ROHIT GOEL]

Dear Sadanand Ji

Sir that discussion is regarding payment of tax under Wrong head while our case is regarding claim of ITC. Section 77 does not cover Input tax.

[Amit Agrawal]

Merely revenue neutrality does not automically / necessarily mean that ITC was not wrongly availed.

Revenue neutrality helps in avoiding proceedings & penalty u/s 74, but proceedings cannot be avoided u/s 73 for want of any 'express' provisions for ITC availment in given situation or for want of express guidlines from Board / GST council.

As rightly observed by you, GST law deals with a situation of paying taxes under wrong head (IGST instead of CGST & SGST, & vi-a-versa) but there is no specific provision to deal with subject situation of ITC availment under wrong head (IGST instead of CGST & SGST, & vi-a-versa).

One of the arguments - can be put by you (in factual specifics of given situation) - is that taxes were corrected paid on output supplies using ITC so available & availed (which is basic intention of availing said ITC) and no undue benefit was taken by disclsouring the same under wrong head. And hence, mere wrong disclosure about heading against ITC so availed while filing GSTR-3B, should not be treated as 'wrong / undue availment' of ITC. And, thereby, requesting that proceedings u/s 73 should be set aside in its entirety.

Having said that & ultimately, only time will tell how legal jurisprudence gets evolved in such situations. But, case is worth fighting for, in my humble view.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

One more thing, even during FY 2017-18, there were some restrictions u/s 49 (5) of the CGST Act, 2017 while using ITC available under different heads and their sequense of utilisation.

While taking argument as one of grounds of defence - as suggested in my earlier post, efforts must be necessarily put - using then prevelant legal conditions & factual position in each of such cases- to explain that no undue benefit what-so-ever was received by the tax-payer against ITC disclosed under wrong head (i.e. despite restrictions while using ITC available under different heads and their sequense of utilisation, during the material period).

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Shilpi Jain]

The department should not unjustly enrich itself due to nadvertent errors made in the returns, more so when there is no dispute regarding eligibility of credit.

[Shilpi Jain]

Also, inadvertent errors in GST during the initial years is possible and should be condoned more so when there is no mechanism for revision of returns.

However Court decisions these days can go either ways.