2026-VIL-54-GSTAT-KLK
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SGST Tribunal

GST - Reversal of Excess Input Tax Credit - Validity of ITC reversal through Form GST DRC-03 - Applicability of Section 128A for waiver of interest and penalty – Respondent-assessee availed excess ITC during financial years 2018-19 and 2019-20 in comparison between GSTR-3B and auto-generated GSTR-2A - Adjudicating authority confirmed the demand. First appellate authority reduced the demand by recognizing reversal of ITC made by Respondent through Form GST DRC-03 – Revenue challenge contending that taxpayer could not establish payment towards discharging ITC reversal liability - Whether reversal of excess ITC through debiting from electronic cash ledger and credit ledger vide DRC-03 is valid - HELD - Reversal of excess ITC by Respondent through Form GST DRC-03 by debiting under CGST and SGST from Electronic Cash Ledger and from Credit ledger is valid and covered the entire disputed amount of excess ITC - The fact that Respondent did not record reasons in column 8 of DRC-03 does not invalidate the reversal as column 8 is not a mandatory field. The Department’s own issuance of DRC-04 acknowledging the receipt of amount debited validates the reversal. The contentions that there was no proof of payment towards discharge of ITC reversal liability and absence of ARN Number in DRC-03 do not gain ground – Further, the contention of the revenue with regard to the absence of ARN Number in DRC-03 is devoid of merit because the appellate authority scrutinized the reconciliation statement and found it correct - However, the First Appellate Authority failed to properly compute the liability of Respondent regarding payment of interest and penalty on the disputed amount – The matter is remanded to FAA to compute interest and penalty with reference to Section 128A of the CGST Act, 2017 which provides for waiver of interest and penalty relating to demands under Section 73 for the period from 1st July 2017 to 31st March 2020 - The appeal is partly allowed and remanded for computation of interest and penalty – Ordered accordingly
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