Suggestions on GST Acts (July 2017) by Institute of Chartered Accountants of India
33. Matching, reversal and reclaim of input tax credit
Section 42(1) of the CGST Act provides that the details of every inward supply furnished by a registered taxable person (hereinafter referred to in this section as the ‘recipient’) for a tax period shall, in the manner and within the time prescribed, be matched-
(a) with the corresponding details of outward supply furnished by the corresponding taxable person (hereinafter referred to in this section as the ‘supplier’) in his valid return for the same tax period or any preceding tax period,
(b) with the integrated goods and services tax paid under section 3 of the Customs Tariff Act, 1975 in respect of goods imported by him; and
There is no provision to cover situations where recipient pays tax on reverse charge which is not disclosed by the supplier. Where a recipient of Goods or Services pays the taxes on reverse Charge basis he should not be denied ITC of the same merely on the grounds that it is not disclosed by a Supplier.
It is therefore suggested that a specific provision be added to cover this aspect for the purpose of better compliance by supplier.
Also exclude from the operation of this section in cases covered by section 18(4) – bona fide exemption reversed.
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