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ITC of IGST wrongly claimed in CGST and SGST

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ANAND BAGADE

23 Points Posted on 13 May 2024

Good Morning,

One dealer was having purchase bill of IGST of Rs.500000 (Basic Value) plus IGST of Rs.90000 in FY 19-20. While filing GSTR-3B, dealer wrongly claimed ITC of this bill in CGST of Rs.45000 and SGST of Rs.45000 instead of claiming IGST ITC of Rs.90000. GST Department has issued notice to dealer saying that dealer has wrongly claimed ITC in CGST of Rs.45000 and SGST of Rs.45000. There was no other purchase during the FY 19-20 since dealer started business in March 2020.

There was one service bill raised in March 2020 in which there was tax liability of IGST of Rs.36000 which was paid from CGST ITC.

There was no other transactions in FY 2019-20 apart from this one purchase and one sale transaction.

What could be the solution to this situation.

Kindly give your valuable suggestion.

Thank You

Replies (3)

Quick Summary

A dealer mistakenly claimed Input Tax Credit (ITC) for IGST under CGST and SGST instead of the correct IGST head. The GST department has issued a notice regarding this error. While the mistake resulted in a revenue-neutral situation, the dealer needs to address the notice. Suggestions include responding to the tax officer, potentially filing a rectification application, and referencing a recent Kerala High Court ruling that supports considering rectification for such ITC claims.

CA Anoop Kumar Sharma

Accounts Manager

1470 Points Posted on 13 May 2024

In my opinion, it's important to initially respond appropriately to the AO regarding notices received. If the AO permits, you can rectify any mistakes. Otherwise, you may need to file a rectification application after receiving the final order.

CA Mayank A Jain

Chartered Accountant in Practice

855 Points Posted on 15 May 2024

The impact is revenue neutral. There may not be need of reversal/ pay back as it does not lead to overall excess claim of ITC.

Recently, Kerala High Court held that rectification application to be considered by the GST Department if ITC wrongly claimed under CGST and SGST instead IGST - Divya S. R. v. Union of India [WP(C) No. 38 Of 2024 dated January 03, 2024].

You can fight on these two grounds.