Input GST reversed because of disputes with suppliers now can I re-claim

This query is : Resolved

Gopal Joshi (Querist)
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07 August 2024 Dear Experts,
In FY 22-23 my company purchased goods from 5-6 suppliers and claimed GST in the respective months. But, in the same year the company detected a scam in the purchase department. So, we refunded the GST through cash of some suspicious parties, but after investigation in FY 24-25 we found that some parties were genuine. Can we get GST refund in FY 2024-25? Please help me as the amount is very huge
If yes, please provide me supporting evidence like judgement, circular, section etc.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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13 August 2025 Legal Framework Around Reversals and Reclaims
Rule 37A of the CGST Rules (Effective from Dec 26, 2022)
If a supplier fails to file GSTR-3B or deposit tax, the buyer must reverse the ITC previously claimed, as per Section 16(2)(c) and Section 41(2) of the CGST Act.
ClearTax
TaxGuru
However, if that supplier later files the return and pays the tax, the buyer is permitted to re-avail the reversed ITC in a subsequent GSTR-3B.
ClearTax
TaxGuru
So, ITC reversal and re-availing form part of the statutory relief mechanism under this rule.
Judicial Precedents Supporting Buyer Relief
Multiple High Courts have upheld the legitimacy of ITC claims once the supplier fulfills tax obligations:
Calcutta High Court in LGW Industries Ltd. held that ITC is permissible if transactions are bona fide and supplier files returns before their GST registration is cancelled.
TaxGuru
Kerala High Court in Diya Agencies held that ITC can't be denied solely because the supplier didn’t appear in GSTR-2A, provided documents are genuine.
TaxGuru
Calcutta High Court in Gargo Traders v. Jt Commissioner ruled out denial of ITC due to retrospective registration cancellation, if the recipient has proper documentation.
TaxGuru
On the flip side:
Allahabad High Court dismissed a claim where ITC was availed from non-existent firms, emphasizing that ITC should not stand when underlying transactions are fraudulent.
Business Standard
What This Means for Your Case
You reversed ITC (paid in cash) because purchases were suspected of fraud. However, further investigation proves some suppliers were genuine. Here's how you can proceed:
Verify claim period – Rule 37A applies to supplies from FY 2022-23 onward. If the reversal occurred under genuine circumstances (supplier didn’t file GSTR-3B or pay tax), re-availment is possible once the supplier is compliant.
Follow Reversal Rules – First reverse ITC via GSTR-3B (if required under Rule 37A). Once supplier files returns and pays, you may reclaim ITC in Table 4(D)(1) of your subsequent GSTR-3B.
ClearTax
TaxGuru
Document substantiation – Given judicial support, maintain comprehensive records proving:
Supplier paid the GST later, and
Your original claim was bona fide.

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