The GSTAT, Bengaluru Bench in Maltown Electricals Private Limited v. Commissioner of Central Tax, Mysuru [Appeal No. APL/84/BUR/2026 dated September 30, 2026] partly allowed the appeal and set aside the demand of Input Tax Credit (“ITC”) and the penalty imposed under Section 74 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”), and held that where the supplier waives the unpaid balance of consideration through a financial/commercial credit note without reducing the tax charged, the recipient is entitled to retain the full ITC and is not required to reverse the credit under the second proviso to Section 16(2) of the CGST Act. However, the recipient remains liable to pay interest under Section 50 of the CGST Act on the proportionate ITC for the period during which the consideration remained unpaid beyond 180 days.
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