CBIC clarifies how to deal with the difference in ITC availed in GSTR-3B as compared to that detailed in GSTR-2A

Circular No. 183/15/2022-GST (For difference pertaining to FY 2017-18 & FY 2018-19)

Circular No. 193/05/2023-GST (For difference pertaining to FY 2019-20 & FY 2020-21)

Taxpayers are facing issues in reconciliation of ITC that is disclosed in their GSTR-3B & that reflecting in auto-populated GSTR-2A, some common issues for the said mismatch are highlighted below:-

Case 1: Supplier has failed to file GSTR-1 for a tax period but has filed the return in GSTR-3B for said tax period.

Case 2:  Supplier has correctly filled both returns i.e., GSTR-1 & GSTR-3B, but has failed to report a particular supply in GSTR-1.

Case 3: Supplier has wrongly reported the supply as B2C instead of B2B in case of supplies made to registered person.

Case 4: Supplier has declared the supply with wrong GSTIN of the recipient in FORM GSTR-1.

In order to ensure uniformity in the implementation of the provisions of the law across the field formations with respect to ITC mismatch, the Board, in exercise of its powers conferred under section 168(1) of the CGST Act, has issued following clarifications:

Clarification for FY 2017-18 & FY 2018-19 (Circular No. 183/15/2022-GST)

1. The CBIC Circular provides that in the aforesaid situations the proper officer may allow the claim of the ITC subject to verification of the following:

• Fulfillment of the conditions of Section 16 of CGST Act – Eligibility and conditions for taking input tax credit (possession of tax invoice, receipt of goods or service or both, payment to the supplier)

• Check whether any reversal of input tax credit is required to be made in accordance with Section 17 of CGST Act – Apportionment of credit and blocked credit or Section 18 of CGST Act – Availability of credit in special circumstances.

• Verify whether the said input tax credit has been availed within the time period specified under sub-section (4) of section 16 of the CGST Act.

2. Additionally, the proper officer can also allow the claim of credit in lieu of fulfillment of the condition of  clause (c)  of sub-section  (2) of section 16 of the CGST Act subject to the furnishing of the following certificates:

• In case ITC mismatch is upto INR 5 Lakhs –A certificate from the concerned supplier confirming  that the supplies have actually been made by him to the said registered person  and tax  on the said supplies has been paid by the said supplier in his return in FORM GSTR 3B.  

• In case ITC mismatch exceeds INR 5 Lakhs –A certificate containing a valid UDIN  from a Chartered Accountant (CA) or a Cost Accountant (CMA), certifying that supplies in respect of the said invoices of supplier have actually been made by the supplier to the said registered person and the tax on such supplies has been paid by the said supplier in his return in FORM GSTR 3B.  

3. However, owing to the proviso to section 16(4) it is clarified that, the claim of ITC for FY 2017-18 made after the due date of furnishing return for the month of September 2018 till the due date of furnishing return for March, 2019 (i.e. between 26.10.2018 to  23.04.2019) shall not be covered under aforesaid relaxations if the supplier had not furnished details of the said supply in his FORM GSTR-1 till the due date of furnishing FORM GSTR 1 for the month of March, 2019 (i.e. till 13.04.2019).

Clarification for FY 2019-20 & FY 2020-21 (Circular No. 193/05/2023-GST)

1. It was clarified that the above-mentioned guidelines provided by Circular No. 183/15/2022-GST dated 27^th December 2022 will be also be applicable in  completely same manner for the period 01.04.2019 to 08.10.2019.

2. However, with effect from 09th October 2019 in addition of other conditions of ITC availment, Rule 36(4) of Central Goods and Services Tax Rules, 2017 was inserted which provided that the availment of Input tax credit by a registered person in respect of   invoices or debit notes which were not furnished by the supplier in Form GSTR 1/ invoice furnishing facility (IFF) shall not exceed specified percentage. These specified percentage were amended time to time as mentioned below:

• Period 09.10.2019 to 31.12.2019 –  20%
• Period 01.01.2020 to 31.12.2020 – 10%
• Period 01.01.2021 to 31.12.2021 – 5%

Hence, for the aforementioned periods, Circular No.183/15/2022-GST shall only be applicable for the ITC mismatch within permissible limits of rule 36(4) and not on the remaining excess ITC availed by the registered taxpayer.

3. With effect from 01.01.2022, clause (aa) to sub-section (2) of section 16 of the CGST Act was inserted which states that no ITC shall be allowed from the period 01.01.2022 onwards in respect of a supply unless the same is reported by his suppliers in their FORM GSTR-1 or using IFF and is communicated to the said registered person in FORM GSTR-2B.

Hence, the above clarifications shall not be applicable on the said supplies.

4. It is also further clarified that proviso to rule 36(4) of CGST Rules with respect to cumulative adjustment of Rule 36(4) for the period February to August, 2020 and period April to June, 2021 shall be taken into consideration.

It is important to note that:

1. The aforementioned guidelines are clarificatory in nature and may be applied depending on the specific facts and circumstances of each case in case of bonafide errors and they shall not be used in the interpretation of the provisions of law.

2. Only the current proceedings under scrutiny/audit/investigation etc. will be covered by these guidelines; the concluded proceedings will not be covered by them. However, in situations when adjudication or appeal proceedings are still ongoing, these guidelines will be applicable.

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