GST Input Query 223

I have some query. Please provide answers for following query with mentioning section or notification no.

For month of march 2021, We claimed gst on invoices not uploaded by supplier on the basis of 105% of input reflected in GSTR 2B.

(Eg. Available input on gstr 3B is Rs.10 Lakhs. Actually we would have get input 12 Lakh, one supplier not filed gis return. So input amount Rs.1lakh not reflected in GSTR 2B. We claimed 11 lakh based on 105% of eligible ITC reflected in GSTR 3B.

Now September 2021, last return for mentioning any missing invoices of fy 2020-21. Still return not filed by supplier for claiming input of Rs. 1 lakh ( 12 Lakh ' actually claimable input' - 11 Lakh ' claimed input' ). My issue " what is action against already claimed input of RS. 1 lakh on march 2021? i.e whether we need to reverse claimed amount of Rs. 1 Lakh or not ?

If need to reverse this amount , is there any interest or penalty for claiming this amount as input?

If interest charged by department, whether can we claim this interest amount from supplier?

If that interest can collected from supplier through debit note issued to that supplier, is there any need to collect gst on interest?

Hey Durga Prasad, here’s a detailed answer for your GST ITC query, with relevant sections and notifications:

Your Situation:

You claimed ITC based on 105% of eligible ITC in GSTR-2B as allowed under Notification 1/2021-CT dated 23.02.2021.
Some supplier’s invoice was not uploaded, so ITC claimed was higher than actual ITC available.
Supplier still hasn’t filed the return to upload invoice.
You want to know if you have to reverse this excess ITC, and consequences like interest/penalty.

1. Do you need to reverse the claimed ITC of ₹1 Lakh?

Yes. As per Section 16(2)(aa) of CGST Act, ITC can be claimed only if supplier has uploaded the invoice on GST portal.
Also, as per Rule 36(4) of CGST Rules, if the supplier does not upload the invoice, you have to reverse the ITC previously claimed.

Since supplier hasn’t uploaded the invoice by the cut-off date (September 2021), you are required to reverse the ₹1 Lakh ITC in your subsequent return.

2. Is there interest or penalty on reversing the excess ITC?

Under Section 50(1), if ITC wrongly availed and utilized, you have to pay interest at 18% per annum on the amount of ITC wrongly availed.
Penalty may also apply under Section 122 if the act is found to be willful and fraudulent, but generally, interest is the key charge here.

Since you claimed excess ITC (₹1 Lakh), you are liable to pay interest from the date you claimed the ITC (March 2021) till the date of reversal/payment.

3. Can you claim this interest amount from the supplier?

Yes, you can claim the interest amount from your supplier as compensation for delay or default.
This should be agreed contractually or through communication.
The interest is a commercial matter between you and supplier, outside GST law.

4. If interest is collected from supplier via debit note, do you have to charge GST on interest?

Yes, interest on delayed payment is a taxable supply under GST as per Notification No. 12/2017-CT and classified under HSN 997212.
Therefore, you should raise a debit note with GST on interest amount while recovering it from supplier.

Summary Table:

Question	Answer	Reference / Section
Need to reverse excess ITC?	Yes, if supplier doesn't upload invoice	Section 16(2)(aa), Rule 36(4)
Interest/penalty on reversal?	Interest @ 18% applicable; penalty possible if fraud	Section 50(1), Section 122
Can interest be claimed from supplier?	Yes, commercial agreement	Commercial terms
GST on interest recovery?	Yes, GST applicable on interest	Notification 12/2017-CT, HSN 997212