This circular provides clarifications on certain issues relating to casual taxable persons and recovery of excess input tax credit (ITC) distributed by an Input Service Distributor (ISD) to ensure uniform application of GST provisions.

It clarifies that while applying for registration as a casual taxable person, the advance tax required to be deposited should be based on the estimated net tax liability and not the gross tax liability. Accordingly, eligible ITC expected to be available to the casual taxable person may be deducted while calculating the amount of advance tax to be paid at the time of registration.

The circular further clarifies that a casual taxable person can operate for a maximum period of 180 days, including extension. In cases of long-duration exhibitions exceeding 180 days, such persons cannot continue as casual taxable persons and are required to obtain normal registration. For such normal registration, the allotment or permission letter for use of exhibition premises will be treated as valid proof of place of business, and no advance tax is required. The registration may be surrendered after completion of the exhibition.

With regard to excess ITC distributed by an ISD in violation of section 20 of the CGST Act, it is clarified that such excess credit shall be recovered from the recipient units along with interest and penalty, if applicable. Recipient units may voluntarily pay the excess amount using Form GST DRC-03. Where voluntary payment is not made, recovery proceedings may be initiated under sections 73 or 74, and the ISD will also be liable to a general penalty under section 122 of the CGST Act.