ITC Cannot Be Denied Based on GSTR-2A Omissions: Kerala High Court Ruling

In a recent ruling dated September 12, 2023, the Kerala High Court ordered that the denial of ITC to a buyer solely based on missing entries in GSTR-2A of seller is not justifiable.

The court emphasized that the GSTR-2A form should not be the sole determinant for restricting ITC to a buyer.

Justice Dinesh Kumar Singh ordered a re-evaluation of the issue by the Assessing Officer, allowing the petitioner, the purchaser, an opportunity to substantiate their claim for ITC. The court stated that if the evidence presented by the petitioner demonstrates a genuine and legitimate claim, the input tax credit should be granted. The absence of tax reflection in Form GSTR-2A should not serve as grounds to deny the rightful claim of an assessee to input tax credit.

The petitioner was dissatisfied as their ITC claim of Rs. 44,51,943.08 for both CGST and SGST was restricted to a significantly lower amount. The tax authorities relied on GSTR-2A information, allowing only a fraction of the claimed credit. The petitioner’s legal representative argued that denying the ITC claim based solely on GSTR-2A figures was unjustifiable, urging independent assessment of eligibility by the Assessing Authority.

Referring to Section 16(2) of the GST Act, the legal representative emphasized that the petitioner had fulfilled all specified conditions, including tax payment to the selling dealer. Despite meeting these requirements, the assessing authority revoked the claimed credit and instructed the petitioner to pay the disallowed amount as tax.

The Court, after careful consideration of the arguments and assessment order, concluded that denial of the petitioner’s ITC was solely based on GSTR-2A amounts and thus unsupported. The case was remitted to the Assessing Officer for a fresh evaluation, allowing the petitioner to present evidence to substantiate their ITC claim.

The Court directed the petitioner to appear before the assessing authority within fifteen days, presenting all necessary evidence. Upon the examination of the provided evidence, the assessing authority will re-evaluate and pass a fresh order in accordance with the law, as the Court disposed of the plea.

This landmark ruling emphasizes the importance of considering all relevant evidence beyond GSTR-2A in determining a purchaser’s eligibility for Input Tax Credit, ensuring a fair and just assessment process.

Case Title: Diya Agencies vs State Tax Officer & Ors; Citation: WP(C) N0. 29769/2023

Source Link: https://blog.saginfotech.com/kerala-hc-buyer-cant-refused-gst-credit-sellers-gstr-2a-omission

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