I received a notice from the GST Department stating that items purchased under a certain HSN code categorized under electrical goods are not considered part of my inventory. These items, classified as electrical goods, are deemed capital goods for which Input Credit is not allowed. However, these electrical goods are indeed part of my inventory and are utilized as raw materials. Could you please provide the grounds for appeal or any judgments passed by the honorable high court in this matter?

1. Excess claim of ITC:

The excess input tax credit (ITC) claimed on account of non-reconciliation of information

Under Sec 16(2)(c) every registered person shall be entitled to take credit of ITC on supply of goods or services to him subject  to the condition  that the tax charged  in respect  of such supply  has been actually paid to the Government either in cash or through utilization of ITC admissible in respect of such supply.

It is observed that the taxpayer has not correctly availed input tax on his inward supplies on reconciliation of turnovers in GSTR-09.

• Under declaration of Ineligible ITC:

Under Sec 17(5) of the SGST  Act, 2017 input tax credit shall not be available in respect of the list  of commodities &  services  mentioned therein  subject  to certain  conditions.

It is seen from GSTR-09 and other information that they have claimed ITC  on these  commodities  and therefore the ITC claimed on these commodities or services is proposed to be recovered.