QUESTION

What are the consequences if supplier of services is charged excess GST (18% instead Of 12%) in Invoices and we are taken the full ITC (18%) as per Invoices?

ANSWER

Facts of the case:Supplier has charged 18% tax instead of 12% on invoice.

Law Applicable: As per section 16(2):
Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,
a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;
b) he has received the goods or services or both.
c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and
d) he has furnished the return under section 39

Interpretation: As per the above mentioned section, recipient is eligible to claim ITC upon fulfillment of the specified conditions. The recipient shall be eligible to claim ITC as charged on the invoice subject to the condition that the supplier has paid full amount of such tax to the government and has not applied for refund of such excess tax paid. If he has applied for refund then you will be liable to reverse your excess ITC (6%)
The responsibility of classification of rate of tax on outward supply is that of the supplier and not of the recipient. Therefore recipient cannot be held liable for such incorrect classification. Also, tax is paid at higher rate and there is no short levy of tax.

Conclusion:There is no restriction on your account for not availing ITC @ 18% if all the specified conditions of section 16(2) are fulfilled and no refund has been applied by the supplier. (Reply dt. 22-01-2020)