Recovery of credit distributed in excess by Input Service Distributor (ISD):

There could be a situation of distribution/use of excess credit in comparison to what is available or allowed under the law. To take care of this situation, Section 18 of the MGL contains provisions for recovery of excess credit distributed by ISD.

Section 18(1) of the MGL provides that in case the credit distributed by an ISD is more than the credit available to them, the excess credit may be recovered from ISD by initiating action under the provisions of Section 51 of the MGL.

Section 18(2) of the MGL provides that in case the credit distributed by ISD is in contravention of Section 17 (which could be distribution of more than available credit or distribution of credit in incorrect ratio or distribution of credit to a supplier not entitled to it or it could relate to the type of tax distributed), the excess credit may be recovered from the Supplier (i.e. recipient) by initiating action under the provisions of Section 51 of the MGL.