Issue in reporting GSTR 1 and GSTR 3B for the year 2019-20

This query is : Resolved

Astaf Mansuri (Querist)
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30 May 2024 One of our dealers received a Show Cause Notice (SCN) for excess Input Tax Credit (ITC) availed for the year 2019-20. The notice states that the ITC as per GSTR-2A is reduced by the ineligible ITC according to Section 16(4), mentioning that the supplier filed GSTR-1 after the cutoff date of 22-10-2020. The remaining ITC was then compared with the ITC availed as per GSTR-3B, resulting in the determination of excess ITC.

When we contacted the supplier who filed late, we learned that they had submitted their GSTR-3B return on time but filed GSTR-1 on 18-02-2021, after the cutoff date. Given that the supplier paid the tax and set off liabilities in GSTR-3B on time, and We filed GSTR-9 and GSTR-9C on 27-02-2021.
Can we claim the ITC in this scenario?
Any ruling or judgment available to support our claim?

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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31 May 2024 See fact of the matter is that if you are looking for specific ruling in favor on section 16(4), as of now various HCs have rejected the challenge to Constitutional validity but in Shanti motors case, SLP before SC is pending for adjudication so you can mention this in your response to SCN. Another thing you can say is that section 16(4) is not applicable in your case as you have claimed the ITC within time and it does not depend upon the supplier filing GSTR-1 after due date.
You can also say that you are not responsible for delay on the part of supplier's fault. Also state that section 16(2)(c) have been complied with since the supplier has made payment through 3B to the department within time so asking for reversal will amount to double taxation and undue enrichment of the revenue which is not legally justified.