Answer

1. F

   Facts

   Settlement by mutual set-off of dues, properly documented, is generally treated as payment, but the law does not spell it out. Keep a signed set-off agreement and ledger confirmations.

2. P

   Provisions and law

   • Rule 37, CGST Rules 2017If the supplier is not paid within 180 days of the invoice, the proportionate ITC is shown as reversed in the GSTR-3B for the tax period immediately after the 180 days, with interest under Sec 50; it is re-availed once payment is made. Not applicable to reverse charge supplies, and to deemed supplies without consideration.
   • Sec 155, CGST Act 2017The person who claims ITC has the burden of proving that the claim is genuine.
3. A

   Analysis

   If you owe ₹5 lakh and the supplier owes you ₹3 lakh, a documented set-off reduces the unpaid balance to ₹2 lakh. Pass journal entries on the set-off date and get the supplier's confirmation. Officers may question informal adjustments, so paperwork matters. Confidence in this treatment is medium.

4. C

   Conclusion

   1. 1Sign a set-off agreement with the party.
   2. 2Pass journal entries on the set-off date.
   3. 3Get ledger confirmation from both sides.
   4. 4Treat only the net unpaid amount for Rule 37.

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.