Taxpayers can Reverse Wrongly Availed CENVAT Credit and Inadmissible Transitional Credit: CBIC [Read Circular]

The Central Board of Indirect Taxes and Customs (CBIC), while clarifying the process of recovery of arrears of wrongly availed CENVAT credit under the existing law and CENVAT credit wrongly carried forward as transitional credit in the GST regime, said that the taxpayers reverse the wrongly availed cenvat credit under the earlier tax regime and inadmissible transitional credit under GST regime.

Earlier in April, the Board had clarified that the recovery of arrears arising under the existing law shall be made as central tax liability to be paid through the utilization of the amount available in the electronic credit ledger or electronic cash ledger of the registered person, and the same shall be recorded in Part II of the Electronic Liability Register (FORM GST PMT-01).

In the present circular, the Board said that since the functionality to record this liability in the electronic liability register is not available on the common portal, the taxpayers can reverse the wrongly availed CENVAT credit under the existing law and inadmissible transitional credit through Table 4(B)(2) of FORM GSTR-3B.

“The applicable interest and penalty shall apply on all such reversals which shall be paid through entry in column 9 of Table 6.1 of FORM GSTR-3B,” the circular said.