Dear All,

The Goods and Services Tax Network (GSTN) has clarified procedures to address issues related to inadvertently rejected documents (Invoices, Debit Notes, Credit Notes, and ECO documents) in the Invoice Matching System (IMS) by the recipient taxpayer. The clarifications provide a structured resolution mechanism for both recipient taxpayer and supplier, as summarized hereinbelow:

ITC availment on inadvertently rejected invoices/ debit notes/ ECO documents by recipient taxpayer and its impact on supplier’s tax liability:

• In cases where the recipient taxpayers have inadvertently rejected an invoice, debit note, or ECO-document in IMS, they are still eligible to avail Input Tax Credit (ITC)
• The supplier must re-report the same document without any changes either through GSTR-1A for the same return period or via the amendment table of a subsequent GSTR-1/IFF
• Once the document is made available again in IMS, the recipient taxpayer needs to accept it and recompute their GSTR-2B on the IMS portal. The ITC will then be available in full as per the re-reported document, since the original entry had been rejected
• Such re-reporting by the supplier does not impact the supplier’s liability, provided the values remain unchanged. As the amendment tables consider only the delta values (i.e., changes from the original submission), the re-reporting of the same document has a zero-differential impact on the supplier’s tax liability

Reversal of ITC for inadvertently rejected credit notes by recipient taxpayer and its impact on supplier’s tax liability:

• In cases where a credit note has inadvertently rejected by the recipient taxpayer, and the corresponding GSTR-3B has already been filed. The recipient taxpayer must similarly request the supplier to re-report the original credit note (unchanged) in either GSTR-1A of the same period or in the amendment table of any subsequent period’s GSTR-1/IFF
• After accepting the re-furnished credit note on IMS and recomputing GSTR-2B, the recipient taxpayer’s ITC will be reduced by the value of the credit note, as the entire original credit note was earlier rejected
• From the supplier’s perspective, once a credit note is rejected by the recipient taxpayer, the liability gets added back in the open GSTR-3B due to the recipient taxpayer’s action
• However, once the credit note is re-reported and accepted by recipient taxpayer, the liability is reduced by the same amount, resulting in a net one-time impact on the supplier’s tax liability. This ensures that the system accurately reflects adjustments without duplication of liability