Form GSTR-3B is a monthly summary return filed by the taxpayer by the 20th of the next month or the 22nd/24th of the month following the quarter. Form GSTR- 2A is an auto-populated form generated in the recipient’s login, covering all the outward supplies (From GSTR-1) declared by his suppliers. When the supplier files GSTR-1 in any particular month disclosing his sales, the corresponding details are captured in GSTR-2B and GSTR-2A of the recipient. While the filing of Form GSTR-2 has been kept in abeyance, it’s still important under the GST framework for the taxpayers to reconcile the ITC claimed in Form GSTR-3B and Form GSTR-2A. GSTR-3B is a summary return. Hence, the amount of ITC available as disclosed must match with tax details disclosed in Form GSTR-2B regularly, along with GSTR-2A.
Department has to go to both the recipient and the supplier in case of a mismatch of GSTR 2A and 3B The Taxpayer may put forth an argument on the basis of Section 42(3) of The CGST Act. Section 42(3) states that the department has to go to both the recipient and the supplier in case of a mismatch of GSTR 2A and 3B. The word ‘both’ in section 42(3) is relevant and hence the department cannot only come to only the recipient and ask for input tax reversal. The Madras High Court in M/S. D.Y. Bethel Enterprises versus The State Tax Officer (Data Cell), (Investigation wing) Commercial Tax Buildings, Tirunelveli has quashed the order imposing GST liability on the recipient on account of non-payment of tax by the supplier of goods.
The doctrine of Impossibility As per Section 16 (2) (c) of the CGST Act, the benefit of ITC cannot be denied to the taxpayer on account of a default of the supplier, over whom the taxpayer does not have any control, which is very well explained by the legal maxim, ‘lex non-cogit ad impossibility, which means the law cannot compel a man to do that which cannot possibly be performed. Mismatch up to 10% (20%) allowed In view of Rule 36 of CGST Rules by inserting sub-rule (4) up to 20% of eligible credit can be availed by the assessee in respect of invoices/ debit notes, the details of which have not been uploaded by the supplier. Recently effective from January 01, 2020, said 20% ITC has been replaced with 10% ITC.
Thus, taxpayers not uploading relevant invoices with their returns will be eligible only for 10% ITC as of date. Penal action and prosecution In case it is found that mismatch is due to credit is taken on the basis of fake invoices, strict penal action will be taken as per the provisions under the GST legislation, making it a non-bailable offense. The move was brought recently in Budget 2020 and has already been approved by the GST Council