Format of CA Certificate required in case of ITC mismatch as per GSTR-3B and GSTR-2B

The Central Board of Indirect Taxes and Customs (CBIC) issued a Circular last year asking for an Independent Practitioner’s Certificate in respect of credit mismatch.

Certificate for Credit Mismatch

Name and Address of the Applicant

1. This Certificate is issued in accordance with the terms of our agreement dated ………….

2. M/s (hereinafter referred as “Supplier”) is having GSTIN (Registration with effect from ………………………………) and is having principal place of business at ………………………………………………………… and Supplier has following additional places of business:

(a)

(b)

3. M/s (hereinafter referred as “Recipient”) is having GSTIN (Registration with effect from ………………………………) and is having principal place of business at ………………………………………………………… Supplier has following additional places of business:

(a)

(b)

4. Central Board of Indirect Taxes & Customs (‘CBIC’) has issued Circular No. 183/15/2022-GST dated 27th December 2022 (hereinafter referred to as “Circular”) & Circular No. 193/05/2023-GST dated 17th July 2023, in case of mismatch of bona fide eligible input tax credit of a Recipient with respect to the invoices issued by the Supplier (hereinafter referred to as “mismatched invoices”) that cannot be validated through the mechanism of FORM GSTR- 2A report for the period [i.e., the supplier has omitted or failed to furnish the correct details of outward supplies in their FORM GSTR-1, which has led to certain deficiencies or discrepancies in FORM GSTR- 2A of their Recipient].

Para 4.1 and 4.1.1. of Circular requires that in order to verify the condition of clause (c) of sub-Section (2) of Section 16 of CGST Act that tax on the said supply has been paid by the Supplier in cases, where difference between the ITC claimed in FORM GSTR-3B and that available in FORM GSTR 2A of the registered person in respect of a Supplier for the said financial year exceeds Rs. 5 lakh, the proper officer shall ask the registered person to produce a certificate for the concerned Supplier from the Chartered Accountant (CA) or the Cost Accountant (CMA), certifying that supplies in respect of the said invoices of Supplier have actually been made by the Supplier to the said registered person and the tax on such supplies has been paid by the said Supplier in his return in FORM GSTR 3B.

Responsibility of Management of the Supplier

Management of the Supplier is responsible for preparation, maintenance and submission of records in relation to requirements for verification and validation that due tax has been paid on the supplies covered by the mismatched invoice satisfying the condition as provided under Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 (in short “CGST Act”).

It is the responsibility of the Management of the Supplier to ascertain fulfilment of the following conditions of Section 16 of CGST Act in respect of the input tax credit availed by them and utilised for discharging output liability:

i) They are in possession of a tax invoice or debit note issued by the Supplier or such other tax paying documents;

ii) They have received the goods or services or both;

iii) They have made payment for the amount towards the value of supply, along with tax payable thereon, to the registered person who has supplied goods or services or both to the Supplier;

iv) The registered person who has supplied goods or services or both to the Supplier, has have paid due tax on the outward supply by way of cash or admissible input tax credit in respect of the said supply;

v) Appropriate reversal of input tax credit has been made in accordance with Section 17 or Section 18 of CGST Act.

Management of the Supplier is responsible to ensure that books, records documents and information made available for purposes of verification are truthful and reliable, extracted from contemporaneous records for the purposes of establishing reliability of assertions made by them.

Practitioner’s Responsibility

Pursuant to requirements of Circular, our responsibility is to verify and validate that tax in respect of the supplies covered by the mismatched invoices, has been paid by the Supplier in his return in FORM GSTR 3B as the difference between the ITC claimed in FORM GSTR-3B and that available in FORM GSTR 2A of the Recipient in respect of the said Supplier for the said financial year exceeds Rs 5 lakh.

All details which are required to be furnished in the certificate have been provided by the Management (of the Supplier) to us. The authorship of underlying data based on which the present certificate has been issued, will not be ours but will always be with them (Management of the Supplier).

Our exercise is to review and verify the books of account, tax invoices, returns and other records of the Supplier and not that of the Recipient who has availed the input tax credit. Considering that we are carrying out the exercise of verification and validation of discharge of output tax by the Supplier, the scope of our responsibility is not to examine or opine on the admissibility of input tax credit in the hands of the Recipient.

The present certificate is limited to statement of fact and is not an opinion about the admissibility of input tax credit. The certificate traces the flow of tax invoice(s) under review into the data in Common Portal and related taxes discharged via FORM GSTR-3B returns filed in one or other tax period.

Provision of Section 16(2)(c) of the CGST Act requires that the tax charged in respect of 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.

However, given the inherent limitation which arises out of non- availability of reliable mechanism either by the Common Portal or by the Government, pertaining to tax being deposited in respect of the credit being availed and utilised by the Supplier for discharge of outward liability on the supplies covered by the mismatched invoices, we have relied upon the data to the extent available by the Common Portal and the information and documents made available by the Management of the Supplier for verification of stipulation as provided under Section 16(2)(c) of the CGST Act.

We have conducted our examination in accordance with the Guidance Note on Reports or Certificates for Special Purposes (Revised 2016) issued by the Institute of Chartered Accountants of India. The Guidance Note requires that we comply with the ethical requirements of the Code of Ethics issued by the Institute of Chartered Accountants of India.

We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC) 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements.

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