Sudoku of Mismatch of ITC between

GSTR 3B & GSTR 2A FY 1718 & FY 1819

Cir. No 183/15/2022-GST dated 27.12.2022
CA Nitin Bhuta Mumbai
 Disclaimer
All views stated are my personal views, they are not binding on
ICAI/Study Circle. My personal views may be correct/incorrect as
they are expressed based on my understanding of the subject.
All members/listeners are requested to go through tax law provisions
on their own and advise their clients accordingly as each situation is
peculiar in itself.
All Illustrations provided are imaginary and any resemblance to any
situation/s is purely co-incidental and without any intentions to
disclose private and confidential information.

CA NITIN BHUTA MUMBAI MOBILE NO. 9820295319 E-MAIL: [email protected]

 *WIPRO
WP 16175/2022
Kar HC Sudoku of Mismatch of ITC
06.01.23

Circular No 183/15/2022- GST dated 27.12.2022

- Clarification to deal with difference in ITC availed in GSTR 3B vs. GSTR 2A -FY 1718 & FY 1819
- FY 1920 *, FY 2021, FY 2122 ?????
• Intention is minimize the litigation arising because of the mismatches due to bonafide reasons.
• If assessment proceedings are completed then the above circular is not applicable.
• Applicable to only pending assessments and/or adjudication pertaining to FY 1718 & FY 1819 viz.
Scrutiny/Audit/Investigation etc./Adjudication/Appeals/Summons???.
• Reporting issues – limited specific scenarios
• Non reporting of Tax Invoices in GSTR 1 * as R1 filed or missed to file in R1 or;
• reported as B2C as against B2B * but;
• * levies paid in GSTR 3B;
• thus, not reflected in GSTR 2A.
• Mis- reporting of invoices in GSTR 1- Invoice Number/Date/Incorrect name/Incorrect GSTIN
Number but levies paid in GSTR 3B, thus, not reflected in GSTR 2A.
• Communication by Proper Office of actual recipient – where incorrect GSTIN is reported.

CA NITIN BHUTA MUMBAI MOBILE NO. 9820295319 E-MAIL: [email protected]

 Section 16 of CGST Act 2017
SECTION 16. Eligibility and conditions for taking input tax
credit. (as applicable to FY 1718/FY1819)—
SECTION 16. Eligibility and conditions for taking input
tax credit. (as applicable to FY 1718/FY1819)—
(i) where the goods are delivered by the supplier to a
(1) Every registered person shall, subject to such conditions
recipient or any other person on the direction of such registered
and restrictions as may be prescribed and, in the manner, person, whether acting as an agent or otherwise, before or
specified in section 49, be entitled to take credit of input tax during movement of goods, either by way of transfer of
charged on any supply of goods or services or both to him documents of title to goods or otherwise;
which are used or intended to be used in the course or
furtherance of his business and the said amount shall be (ii) where the services are provided by the supplier to any
credited to the electronic credit ledger of such person. person on the direction of and on account of such registered
person.]
(2) Notwithstanding anything contained in this section, no
registered person shall be entitled to the credit of any input (c) subject to the provisions of the tax charged in respect of
tax in respect of any supply of goods or services or both to such supply has been actually paid to the Government, either
him unless, —
in cash or through utilization of input tax credit admissible in
(a) he is in possession of a tax invoice or debit note issued
respect of the said supply; and
by a supplier registered under this Act, or such other tax
paying documents as may be prescribed; (d) he has furnished the return under section 39 :

(b) he has received the goods or services or both. Provided that where the goods against an invoice are received in
lots or instalments, the registered person shall be entitled to
[Explanation. — For the purposes of this clause, it shall be take credit upon receipt of the last lot or instalment :
deemed that the registered person has received the goods or,
as the case may be, services

CA NITIN BHUTA MUMBAI MOBILE NO. 9820295319 E-MAIL: [email protected]

 Specific and Sudoku of Mismatch of ITC – GSTR 3B vis-à-vis GSTR 2A – FY 1718 & FY 1819 * Each GSTIN
Limited Flow for Reading – Numbers 1 to 7 registration
Applicability number wise

Incorrect GSTR 1 unfiled or failed to Levies paid in GSTR 3B

1 B2C Reporting
GSTIN/Invoice No/Date report supply but not reported in R1

2 Time limit u/s 16(4) Transaction reporting/Non Reporting

3 Non reflection in GSTR 2A
In GSTR1/GSTR 3B

Actual Supplies
FY 1718 FY 1819 BOAs
Beyond time
Upto Upto Within time limits Lapse Records
limits
31.03.2019 30.09.2019 Documents
Mismatch between * RTP to produce certificate With
4 Less than 5 lakhs * How to deal with following
GSTR 3B & GSTR 2A from the supplier * details & 7 scenarios that may arise
docume RC Cancellation/
5 Mismatch between CA/CMA certificate with UDIN
More than 5 lakhs ntation Missing Suppliers/ Change of
GSTR 3B & GSTR 2A & RTP certificate too **
POB/Untraceable RTPs/ Changes
** certificate to be issued based on facts and not the opinion, further it should be accurate in Business structure/Demise
6 etc. ????? of supplier or RTPs.
Data and value certified needs to be accurate supported with detailed workings/documentation.

CA NITIN BHUTA MUMBAI MOBILE NO. 9820295319 E-MAIL: [email protected]

 Food For Thought ????
• Considering several amendments made applicable from various dates, whether following amendments provide support for
defending mismatch notices issued to the RTPs even after issue of Circular No 183/15/2020, in my personal view, they do provide good
defence depending on the facts of the matter (contd.)
Judicial Precedents

LGW Industries Ltd (Kolkata HC) [2022] 134 taxmann.com 42 (Calcutta)

Input tax credit - Suppliers alleged to be fake and non-existent - Department contended that genuineness of suppliers
was not verified by petitioners before entering into transactions - On other hand, petitioners contended that genuineness
of suppliers was verified and that all transactions entered into were before cancellation of their registrations and
therefore, impugned transactions were valid - HELD : Issue of entitlement to input tax credit was to be considered afresh
- Payments along with tax actually paid to suppliers were to be verified - It was also to be verified as to whether
transactions were made before cancellation of registration of suppliers - Benefit of ITC would be granted if purchases
were genuine and purchases were supported by documents

M/s. D Y Beathal Enterprises ( Madras High Court ) 127 Taxmann 80

Where assessee purchased goods through registered dealers and substantial portion of sale consideration was paid
through banking channels, revenue could not reverse input tax credit availed by assessee for failure of seller to deposit
tax on such supply without examining seller and initiating recovery proceeding against seller

CA NITIN BHUTA MUMBAI MOBILE NO. 9820295319 E-MAIL: [email protected]

 Food For Thought ????
• Considering several amendments made applicable from various dates, whether following amendments provide support for
defending mismatch notices issued to the RTPs even after issue of Circular No 183/15/2020, in my personal view they do provide good
defence depending on facts of the matter (contd.)
Judicial Precedents - Erstwhile Regime – persuasive reference only
M/s. Mahalaxmi Cotton Ginning Pressing & Oil Industries v. State of Maharashtra
48. In the context in which the words "actually paid" are used in the MVAT Act, "actually paid" means what has been as a
matter of fact deposited in the treasury. Hence, in the context of the provisions of Section 48(5), we cannot accept the
contention of the Petitioner that "actually paid ... in the government treasury" means or should be read to mean what tax
ought to have been deposited but has not actually been deposited in the treasury. Finally we may note that a provision
such as Section 48(5) which uses clear and express words such as that in "no case" shall a set off exceed the tax "actually
paid" in the government treasury did not fall for consideration.”
Arise India ( Delhi HC ) WP (c ) 2106/2015
There is a failure by the legislature to make a distinction between the purchasing dealer who have bonafide transacted
with the selling dealer by taking all precautions as required by the DVAT Act and those that have not. Therefore, there was
need to restrict the denial of ITC only to the selling dealers who had failed to deposit the tax collected by them and not
punish bona fide purchasing dealer. Hon’ble Supreme Court has dismissed the Special Leave Petition filed by the
Revenue
Sri Vinayaga Agencies Vs. The Assistant Commissioner, CT Vadapalai 2013 60 VST page 283
It was held therein that the authority does not have the jurisdiction to reverse the input tax credit already availed by the
assesses on the ground that the selling dealer has not paid the tax.

CA NITIN BHUTA MUMBAI MOBILE NO. 9820295319 E-MAIL: [email protected]

 Conclusion

In my personal view,

✓ there is an immediate need for issuing a clarification by the CBIC to address the situations
arising due to RC Cancellation/ Missing Suppliers/Change of original POB/Untraceable
Suppliers /Changes in Business Structure/Demise etc. of the supplier or registered taxable
persons to mitigate litigation so that it is a win win situation for all stakeholders.
✓ If further clarification is issued in each of the above scenarios , this will provide much needed
clarity for the implementation of assessment provisions and adjudications proceedings as per
the provisions of GST Act, 2017.
✓ Similar beneficial circular may be issued for FY 1920, FY 2021 & FY 2122 too.
✓ In addition, many State Governments also have issued similar circulars to help the
Registered Taxable persons. Suitable clarification should also be issued in the interest of all
stakeholders to address issues which could arise out of assessments and adjudications in
such scenarios.

CA NITIN BHUTA MUMBAI MOBILE NO. 9820295319 E-MAIL: [email protected]

SURROUND YOURSELF WITH PEOPLE WHO TALK ABOUT VISION AND IDEAS NOT PEOPLE

Appreciated all of You.

CA Nitin Bhuta
+919820295319
[email protected]
Nitin Bhuta & Co.