THE CENTRAL GOODS AND SERVICES TAX ACT,
2017
RETURNS
Section 42: Matching, reversal and reclaim of input tax credit. (Relevant Rules 69 to 72, Rules 77 to 79)
(1) The details of every inward supply furnished by a registered person (hereafter in this section referred to as the “recipient”) for a tax period shall, in such manner and within such time as may be prescribed, be matched––
(a) with the corresponding details of outward supply furnished by the corresponding registered person (hereafter in this section referred to 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
(c) for duplication of claims of input tax credit.
(2) The claim of input tax credit in respect of invoices or debit notes
relating to inward supply that match with the details of corresponding outward
supply or with the integrated goods and services tax paid under
section 3 of the
Customs Tariff Act, 1975 in respect of goods imported by him shall be
finally accepted and such acceptance shall be communicated, in such manner
as
may be prescribed, to the recipient.
(3) Where the input tax credit claimed by a recipient in respect of an inward
supply is in excess of the tax declared by the supplier for the same supply or
the outward supply is not declared by the supplier in his valid returns, the
discrepancy shall be communicated to both such persons in such manner
as may be
prescribed.
(4) The duplication of claims of input tax credit shall be communicated to the
recipient in such manner as may be prescribed.
(5) The amount in respect of which any discrepancy is communicated under
subsection (3) and which is not rectified by the supplier in his valid return
for the month in which discrepancy is communicated shall be added to the output
tax liability of the recipient, in such manner as may be prescribed, in his
return for the month succeeding the month in which the discrepancy is
communicated.
(6) The amount claimed as input tax credit that is found to be in excess on
account of duplication of claims shall be added to the output tax liability of
the recipient in his return for the month in which the duplication is
communicated.
(7) The recipient shall be eligible to reduce, from his output tax liability,
the amount added under sub-section (5), if the supplier declares the details of
the invoice or debit note in his valid return within the time specified in
sub-section (9) of section 39.
(8) A recipient in whose output tax liability any amount has been added under
subsection (5) or sub-section (6), shall be liable to
pay interest at the rate specified under subsection (1) of
section 50 on the
amount so added from the date of availing of credit till the corresponding
additions are made under the said sub-sections.
(9) Where any reduction in output tax liability is accepted under sub-section
(7), the interest paid under sub-section (8) shall be refunded to the recipient
by crediting the amount in the corresponding head of his electronic cash ledger
in such manner as may be prescribed:
#Provided that the amount of interest to be credited in any case shall not
exceed the amount of interest paid by the supplier.
(10) The amount reduced from the output tax liability in contravention of the
provisions of sub-section (7) shall be added to the output tax liability of the
recipient in his return for the month in which such contravention takes place
and such recipient shall be liable to pay interest on the amount so added at
the rate specified in sub-section (3) of section 50.
#Applicable from a date to be notified later