2026-VIL-285-GSTAT-CHD
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SGST Tribunal

GST - Reversal of ITC under Section 17(2) of the CGST Act, 2017 read with Rules 42 and 43 of the CGST Rules, 2017 where exempt supplies pertain to trading of goods procured at nil rate on which no ITC was availed - The Appellant, a cooperative society, traded in cattle feed which is exempt - Demand for reversal of ITC on common inputs based on the exempt turnover declared in GSTR-9 without reversal - Appellant contended that no input tax was paid or availed on the purchases and that no common credit existed for reversal - Whether reversal of ITC is required under Section 17(2) - HELD - ITC is required to be reversed under Section 17(2) only if the goods or services on which credit is taken are used partly for taxable supplies and partly for exempt supplies. If no ITC is taken on the purchase of wholly exempt traded goods, reversal is not required unless some credit, such as on common input services, is taken and used partly for exempt supplies and partly for taxable supplies, and the reversal is required only to that extent. The matter requires verification of the documents relating to ITC by the original authority - The impugned order is quashed and the matter is remanded for fresh adjudication to verify the ITC availed and to calculate the amount to be reversed, if any, after taking additional evidence and affording a personal hearing – The appeal is disposed of - Demand of differential tax on the basis of reconciliation between GSTR-1 and GSTR-9 for the same financial year - Right to correct figures in the annual return under Section 44 of the CGST Act, 2017 - The Adjudicating Authority demanded the differential tax as the tax liability declared in GSTR-1 was higher than that in GSTR-9. The Appellant stated that the difference was due to clerical errors and that the tax paid in the annual return far exceeded the difference - Whether the demand on the basis of the difference between GSTR-1 and GSTR-9 is sustainable - HELD - GSTR-9 is an annual return under Section 44, and the taxpayer has the right to correct in it the figures declared in the monthly or quarterly returns. As the Appellant claimed that the difference is due to clerical errors and the matter is being remanded on the other issue, the Appellant is to be allowed the opportunity to explain the reasons for the difference to the original authority, which will consider the explanation and decide whether any tax is payable - The matter is remanded to the Adjudicating Authority for fresh adjudication.
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