GST Updates

Option for reversing wrongly availed CENVAT credit under the existing law and inadmissible transitional credit through Table 4(B)(2) of FORM GSTR-3B no longer available to taxpayers

Circular No. 88/07/2019-GST dated 1st February 2019 mandates changes in Circulars issued earlier under the CGST Act, 2017. Circular clarifies that alternative method of reversing the wrongly availed CENVAT credit under the existing law and inadmissible transitional credit through Table 4(B)(2) of FORM GSTR-3B which was provided in Circular No. 58/32/2018 dated 4th September 2018 would no longer be available to taxpayers and they have to discharge the liability through DRC-03. This is a very important clarification since discharge by way of Reversal in GSTR-3B now may not amount to discharge of liability. It would be interesting to see if the governments takes this clarification a step further and makes it applicable on all reversal of Input Tax Credit.

In this regard a very important clarification has been provided in Para 6 of the Circular which is reproduced as under:

 

  1. Circular No. 58/32/2018 dated 04.09.2018

This circular is revised in order to streamline the modes of recovery. Accordingly, the original and the amended relevant para of the circular are detailed hereunder.

 

6.1 Original Para-3

Currently, the functionality to record this liability in the electronic liability register is not available on the common portal. Therefore, it is clarified that as an alternative method, taxpayers may reverse the wrongly availed CENVAT credit under the existing law and inadmissible transitional credit through Table 4(B)(2) of FORM GSTR-3B. The applicable interest and penalty shall apply on all such reversals which shall be paid through entry in column 9 of Table 6.1 of FORM GST-3B.

Emphasis Supplied

 

6.2 Amended Para 3.

It may be noted that all such liabilities may be discharged by the taxpayers, either voluntarily in FORM GST DRC-03 or may be recovered vide order uploaded in FORM GST DRC-07, and payment against the said order shall be made in FORM GST DRC-03. It is further clarified that the alternative method of reversing the wrongly availed CENVAT credit under the existing law and inadmissible transitional credit through Table 4(B)(2) of FORM GSTR-3B would no longer be available to taxpayers. The applicable interest and penalty shall apply in respect of all such amounts, which shall also be paid in FORM GST DRC-03.

 

Emphasis Supplied

Comment: It would be interesting to see if the governments takes this clarification a step further and makes it applicable on all reversal of Input Tax Credit as the Circular was only applicable onĀ CENVAT credit under the existing law and inadmissible transitional credit

.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

To Top