According to Rule 37 of CGST/SGST Rules, if a registered person has availed ITC on the supply of goods and/or services but has not paid the supplier within 180 days of the issue of the invoice, the ITC claim will be reversed in the GSTR-3B return filed after the expiry of 180 days1. However, this rule is not applicable in case of ITC claimed under reverse charge mechanism1. Moreover, as per Rule 37A, a buyer will have to reverse the ITC claims on taxes not deposited by their supplier by September 30th, following the year in which this ITC was claimed via the GSTR-3B form2. This ITC reversal needs to be filed by November 30th, which follows the end of this financial year2.
In your case, if your supplier submitted the invoice for July month in December in the same year, and you have claimed ITC on it in your GSTR-3B return for July month, then you have to reverse the ITC in your GSTR-3B return for January month, which is the month after the expiry of 180 days from the invoice date. However, if you have claimed ITC under reverse charge mechanism, then you do not have to reverse the ITC. Also, you have to ensure that your supplier has deposited the taxes by September 30th of the next financial year, otherwise you have to reverse the ITC again by November 30th of the next financial year.
You can reply to the department by explaining the above provisions and providing the relevant details of your ITC claims and reversals. You can also attach the copies of the invoices and the GSTR-3B returns as supporting documents. You can also request the department to waive off the interest demand if you have complied with the rules and have reversed the ITC in time.
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