Receiving a departmental scrutiny notice for past financial years often triggers immediate anxiety about reversal of input tax credit with interest. During the initial implementation years of GST, many suppliers made clerical errors in Form GSTR-1, such as reporting transactions under B2C tables or typing an incorrect recipient GSTIN. Because Form GSTR-2A was not immediately operational and Section 16(2)(aa) had not yet taken effect, bona fide buyers claimed genuine credit in Form GSTR-3B based on valid tax invoices and proof of payment.
In our practice assisting businesses with departmental audits, we see officers mechanically raising demands whenever GSTR-3B numbers exceed GSTR-2A. To settle widespread audit objections under Section 61, the Central Board of Indirect Taxes and Customs issued administrative directions under CBIC Circular No. 183/15/2022-GST, later expanded by CBIC Circular No. 193/05/2023-GST. These guidelines establish an evidentiary route to satisfy Section 16(2)(c) without forcing automatic ITC reversals.
Applicable periods and legal scope of Circular 183 and 193
The relief framework distinguishes between different periods based on statutory restrictions in force at the time:
For FY 2017-18 and FY 2018-19, Circular 183 applies fully because no percentage cap existed under Rule 36(4). From 1 April 2019 to 8 October 2019, Circular 193 extends the exact procedure of Circular 183 without percentage caps. From 9 October 2019 to 31 December 2019, relief is capped at 20 percent over reported supplies under Rule 36(4). From 1 January 2020 to 31 December 2020, the cap is 10 percent. From 1 January 2021 to 31 December 2021, the cap is 5 percent. From 1 January 2022 onwards, no relief applies under these circulars because Section 16(2)(aa) strictly restricts credit to Form GSTR-2B.
Strict limitation: Paragraph 6 of Circular 183 specifies that these instructions apply only to ongoing scrutiny, audit, or investigation proceedings, and to pending appeals. If an assessment order under Section 73 or Section 74 was already concluded and no timely appeal was filed, the proceeding cannot be reopened merely on the strength of this circular.
The four prescribed mismatch scenarios
Circular 183 identifies four specific reporting errors by suppliers where credit differences in Form GSTR-2A can be verified through certificates:
First, under Scenario A, the supplier failed to file Form GSTR-1 for the tax period but filed Form GSTR-3B and paid the tax. Second, under Scenario B, the supplier filed both returns but omitted a specific invoice in Form GSTR-1. Third, under Scenario C, the supplier issued an invoice with the recipient GSTIN under Rule 46 but wrongly reported the supply under B2C tables instead of B2B. Fourth, under Scenario D, the supplier filed returns but entered an incorrect GSTIN of the recipient in Form GSTR-1.
In Scenario D, the proper officer of the actual recipient sends an intimation to the jurisdictional tax authority of the taxpayer whose GSTIN was wrongly quoted, ensuring that the incorrect recipient has not availed the credit. However, paragraph 3(d) clarifies that granting credit to the actual recipient must not be delayed pending completion of action against the other party.
The Rupee 5 Lakh threshold rule for certification
Paragraph 4.1 of Circular 183 establishes clear documentary tiers based on the quantum of mismatch per supplier in a given financial year:
| Mismatch amount per supplier in FY | Prescribed certifying authority | Mandatory compliance check |
|---|---|---|
| Exceeds ₹5,00,000 | Chartered Accountant (CA) or Cost Accountant (CMA) of supplier | Mandatory Unique Document Identification Number (UDIN) |
| Up to ₹5,00,000 | Authorized signatory of the concerned supplier | Supplier declaration on official letterhead with return details |
For CA or CMA certificates, tax authorities verify the authenticity of the UDIN on the official ICAI portal (udin.icai.org) or ICMAI portal (eicmai.in). A certificate submitted without a valid UDIN is routinely rejected during scrutiny.
Mandatory verification checks by the tax officer
Before accepting a supplier or CA certificate, paragraph 4 of Circular 183 instructs the proper officer to independently verify four foundational requirements under Section 16 of the CGST Act:
The claimant must produce copies of original tax invoices, lorry receipts or delivery challans, and bank statements demonstrating clearance of invoice value plus tax. The officer also verifies whether credit was claimed within the statutory deadlines of Section 16(4) and whether any reversal is warranted under Section 17 or Section 18.
Worked numerical scenario across multiple vendors
For example, consider M/s Apex Engineering Private Limited facing an audit scrutiny notice for FY 2018-19. The tax officer identifies an aggregate ITC mismatch of ₹12,40,000 between Form GSTR-3B and Form GSTR-2A across three different suppliers:
| Supplier name | Supplier GSTIN | ITC claimed in GSTR-3B | ITC in GSTR-2A | Mismatch difference | Applicable relief path |
|---|---|---|---|---|---|
| Precision Metals Ltd | 27AAACP1234A1Z1 | ₹8,50,000 | ₹2,00,000 | ₹6,50,000 | CA Certificate with UDIN required (> ₹5 Lakh) |
| Zenith Logistics LLP | 27AABFZ5678B1Z8 | ₹4,20,000 | ₹1,10,000 | ₹3,10,000 | Supplier Self-Certificate sufficient (≤ ₹5 Lakh) |
| Delta Tech Supplies | 27AACCD9012C1ZG | ₹2,80,000 | ₹0 | ₹2,80,000 | Supplier Self-Certificate sufficient (≤ ₹5 Lakh) |
Precision Metals Ltd has a difference of ₹6,50,000, which exceeds the threshold. Apex Engineering must obtain a certificate from Precision Metals practicing CA confirming invoice details, supplies made, and tax payment in GSTR-3B with UDIN. For Zenith Logistics LLP (₹3,10,000) and Delta Tech Supplies (₹2,80,000), self-certified letters on their respective corporate letterheads are legally adequate.
Certificate format for Chartered Accountant or Cost Accountant
When the mismatch per supplier exceeds Rs 5,00,000, print this draft on the practicing CA or CMA letterhead and ensure UDIN generation:
Certificate format for supplier self-certification
When the mismatch per supplier is up to Rs 5,00,000, the supplier authorized signatory can execute this declaration on company letterhead:
Departmental reply format for Section 61 or Section 73 notices
Submit this response when replying to Form GST ASMT-10 or Form GST DRC-01 notices for past ITC discrepancies:
If your notice has proceeded past the scrutiny stage to a formal show cause notice, read our practical breakdown of GST notice DRC-01 meaning and reply options. If you are handling an ongoing scrutiny inquiry, consult our step-by-step drafting guide for ASMT-10 scrutiny notice reply in Form ASMT-11.
Common pitfalls during audit verification
Overlooking Section 16(4) condition: Paragraph 4.2 of Circular 183 cautions that for FY 2017-18, relaxations do not apply to ITC claims made in Form GSTR-3B filed after the due date of September 2018 return up to March 2019 return, if the supplier failed to report the supply in Form GSTR-1 by the due date of March 2019 return. Always verify return filing dates before issuing or submitting certificates.
A frequent error is submitting a CA certificate issued by the buyer own auditor. The circular requires certification from the supplier CA or CMA, because only the supplier professional has access to the vendor outward tax ledgers and GSTR-3B tax payment challans.
Related guides
- Pharma expired medicine ITC reversal: circular rules and procedure
- ITC on free replacement warranty goods: Circular 195 explained
- Debit note received from supplier: time limit to claim ITC under GST
- ITC reversal on goods sent for exhibition abroad not sold: GST rules and Circular 108
Frequently asked questions
What is the Rupee 5 Lakh threshold in Circular 183?
For each supplier in a financial year, if the ITC mismatch between GSTR-3B and GSTR-2A exceeds Rs 5,00,000, you must submit a certificate from a Chartered Accountant or Cost Accountant with a valid UDIN. If the mismatch for that supplier is up to Rs 5,00,000, a self-certificate from the supplier authorized signatory is sufficient.
Can Circular 183 relief be claimed for FY 2019-20 and FY 2020-21?
Yes, CBIC Circular No. 193/05/2023-GST extended the verification mechanism of Circular 183 to the period from 1 April 2019 to 31 December 2021, subject to the rule 36(4) capping limits applicable during those months.
Does Circular 183 apply to completed scrutiny proceedings?
No, paragraph 6 of Circular 183 specifies that these instructions apply only to ongoing scrutiny, audit, or investigation proceedings and to pending appeals, but not to completed assessments where orders have achieved finality.
Is a CA certificate required from the buyer or the supplier?
The CA or CMA certificate must be obtained for the supplier and certified by the supplier practicing CA or CMA, confirming that the supplier actually made the supplies and paid the output tax in their GSTR-3B.
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Last checked: 18 October 2026. Sources: CBIC Circular No. 183/15/2022-GST, CBIC Circular No. 193/05/2023-GST, Section 16 CGST Act.