Summary of Procedure for Rectification of Orders Related to Wrong Availment of ITC

GST Notification No 22/2024 issued for Procedure for Rectification of Orders Related to Wrong Availment of ITC dated 08-10-2024.

• The Government has introduced a special procedure for registered taxpayers who received an order u/s 73,74,107 or 108 of the CGST Act,2017 related to wrongly claiming ITC due to not following section 16(4) of the act. However, if the ITC is now allowed under section 16(5) or section 16(6) of the Act, and no appeal has been filed against the order then the taxpayer can follow this special process to fix those orders.
• Section 16(5) pertains to claim the ITC on Invoice and debit note for the FY 2017-18, 2018-19, 2019-20 & 2020-21 up to 30-11-2021.
• Section 16(6) pertains to claim of ITC of the invoices or debit notes issued between cancellation and revocation of cancellation of registration in prescribed manner.
• The taxpayers have 6 months from the date this notification is issued to submit an application electronically through the GST portal. This application will request the correction of an earlier order that confirmed the wrong availment of ITC.
• In short, it allows taxpayers to rectify the previous mistakes regarding ITC if the credit is now allowed by the law, provided they have not filed an appeal yet.
• When the taxpayer submits an application to correct the order about wrongly availed ITC, they must also upload the required information in a specific format i.e. Annexure-A with their application. (Format of Annexure-A provided in Notfication)
• The officer who originally issued the order will be responsible for reviewing and rectifying it. This officer will issue rectified order within 3 months from date of application filed.
• Once the rectification is made, the officer will upload a summary of the corrected order electronically: 1. Form GST DRC -08 will be used if the original order was issued under section 73 or 74 of CGST Act. 2. FORM GST APL -04 will be issued if original order was issued under section 107 or 108 of CGST Act.
• The rectification will apply to cases where the ITC was previously claimed incorrectly due to not following section 16(4) of CGST Act but is now allowed u/s 16(5) and 16(6) of CGST Act,2017.
• If rectification negatively impacts the taxpayer (e.g it increased their liability) the tax officer must follow the principles of natural justice, meaning they must provide the taxpayer with fair opportunity to present their case before making any final decision.