Section-37. Matching, reversal and reclaim of input tax credit
(1) 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 additional duty of
customs paid under section 3 of the Customs Tariff
Act, 1975 (51 of 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 and/or debit notes relating to
inward supply that match with the
details of corresponding outward supply or
with the additional duty of customs
paid shall, subject to the provisions of section
16 or 17, as the case may be, be
finally accepted and such acceptance shall be
communicated, in the 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 the manner as may
be prescribed.
(4) The duplication of claims of
input tax credit shall be communicated to the
recipient in the 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 the
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
and/or debit note in his valid return
within the time specified in sub-section (9) of
section 34.
(8) A recipient in whose output tax
liability any amount has been added under subsection (5) or, as the case may be, under
sub-section (6), shall be liable to pay
interest at the rate specified under
sub-section (1) of section 45 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 the 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 45.
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