The case was remanded by court to the original authority for fresh adjudication, with instructions to consider all submitted documents and provide a reasoned decision within three months.
In a significant ruling, the Allahabad High Court has held that the absence of a GSTN in a supplier’s certificate cannot be the sole basis for denying Input Tax Credit (ITC). The case, M/S Bhagwan Das Agrahari vs. State of U.P. (W.T No. 1403 of 2024), directed tax authorities to reassess the applicant’s ITC claim fairly.
Case Background
M/S Bhagwan Das Agrahari, a business entity, filed a writ petition challenging the orders passed by the State of Uttar Pradesh and two other respondents. The dispute arose from proceedings initiated under Section 73 of the Uttar Pradesh Goods and Services Tax (UP GST) Act, wherein the petitioner was accused of wrongfully claiming ITC. However, the tax authorities dismissed the petitioner’s claim without thoroughly evaluating the submitted evidence.
Legal Dispute Over ITC Claim
On December 27, 2022, the petitioner relied on a government circular stating that for supplies valued at less than Rs. 5 lakh, a supplier’s certificate suffices for ITC verification. Accordingly, the petitioner provided the required supplier certificates as per the circular’s guidelines. However, the tax department rejected the ITC claim, arguing that the certificates lacked GSTN numbers and, therefore, were not valid proof of transactions.
Defending its stance, the department contended that the petitioner failed to establish the genuineness of the transactions, leading to the conclusion that the ITC was erroneously claimed. Thus, the department justified its decision to deny the credit.
Also Read: GST Registration Cannot Be Denied Based on State of Origin: Andhra Pradesh High Court
Court’s Observation and Judgment
The petitioner refuted the department’s argument, asserting that the supplier certificates did indeed mention GSTN numbers and that the authorities had misinterpreted the records. The petitioner further argued that rejecting the claim despite compliance with the government circular was arbitrary and unlawful.
After reviewing the evidence, a single-judge bench led by Justice Piyush Agrawal confirmed that the GSTN numbers were mentioned in the supplier certificates. The court ruled that the tax authorities had based their decision on incorrect premises and had unjustly denied ITC on technical grounds.
Consequently, the court set aside the impugned orders and directed the tax department to re-examine the petitioner’s ITC claim. The case was remanded to the original authority for fresh adjudication, with instructions to consider all submitted documents and provide a reasoned decision within three months.
Additionally, the court ruled that any amount already deposited by the petitioner would be subject to the final decision of the tax department. Ultimately, the writ petition was allowed, ensuring that taxpayers are not denied ITC on baseless technicalities.
Key Takeaways
- The absence of a GSTN in a supplier’s certificate is not sufficient grounds for rejecting an ITC claim.
- If a government circular permits supplier certificates for ITC verification, tax authorities must honor them.
- Courts emphasize fair assessment and the consideration of all relevant documents before denying ITC.
- This ruling reinforces taxpayer rights and ensures procedural justice in GST matters.
This judgment sets a crucial precedent in GST litigation, ensuring that taxpayers are not unfairly denied benefits due to minor technical discrepancies.
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