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Repayment of excess claim of ITC

10 April 2023

If I have made excess claim of ITC in previous periods and the proper officer issued demand notice for repayment of the amount, can I utilise credit ledger for this purpose? Or I can setoff only through cash ledger?

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Rama chary Rachakonda (Master in Accounts & high court Advocate email ID:ramachary64@gmail.com voice no:9989324294) (7683 Points)
Replied 10 April 2023

You can do reconciliation of both the ledgers as follows.

Copy your data from the GSTR-3B/1-PDF file and paste the same in the sheet given in the file. Provide details as per tally. Enter GST payment details in Cash ledger. Enter Transitional Credit/Refund Claimed in Credit Ledger.

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Laltha Zuala (153 Points)
Replied 10 April 2023

My question is whether credit ledger can be used to setoff the demand due to excess claim of ITC.

Sourav Dhir (26 Points)
Replied 10 April 2023

The answer is "No".you can't utilize balance of Electronic Credit Ledger for paying the liability if you have claimed Excess ITC since Rule 86 A talks about the conditions of utilization of amount in Electronic Credit Ledger. it has been specifically mentioned that " Not allow debit of an amount equivalent to such credit in E- Credit Ledger for discharge any liability under Section 49" - for the case as mentioned by you above!

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Pankaj Rawat (GST Practitioner) (55057 Points)
Replied 11 April 2023

As per the Definition of Output Tax in Section 2(82) Tax on taxable supply of goods or services & as per Section 49 (4) credit can be used for making payment towards output tax . So in conjointly reading both the Section credit ledger cannot be utilized in reversal of ITC.

Note : If officer has not served the notice on same then the same can be reverse in your subsequent 3B.