Court’s ruling emphasized that when a registered person asserts their eligibility for ITC claim with reference to GSTR-2A and GSTR-9 returns, the assessing officer must thoroughly examine the validity of the claim
Legality of Assessing ITC Claim Solely based on GSTR-3B: In a recent ruling by the Madras High Court in the case of SRI SHANMUGA HARDWARES ELECTRICALS, the Court emphasized that Input Tax Credit (ITC) claims cannot be denied solely because they are not reflected in GSTR-3B returns. This significant decision, outlined in Order No. Writ Petition Nos. 3804, 3808 & 3813 of 2024, dated 20.02.2024, highlights the importance of considering GSTR-2A and GSTR-9 returns when assessing ITC claims.
The case involved a petitioner engaged in the trade of electrical products and hardware. The petitioner asserted that due to an error, nil returns were mistakenly filed in the GSTR-3B returns for assessment years 2017-2018, 2018-2019, and 2019-2020. However, the petitioner claimed eligibility for ITC, which was duly reflected in the GSTR-2A and GSTR-9 (annual) returns.
Despite the petitioner’s claims and the submission of relevant documents, the assessing officer issued separate assessment orders for each year, rejecting the ITC claims solely on the basis of the absence of these claims in the GSTR-3B returns.
The Madras High Court’s ruling emphasized that when a registered person asserts their eligibility for ITC with reference to GSTR-2A and GSTR-9 returns, the assessing officer must thoroughly examine the validity of the claim. This includes reviewing all pertinent documents and providing the taxpayer with the opportunity to submit additional evidence if required.
In this particular case, the Court found that the ITC claims were summarily rejected based solely on the absence of these claims in the GSTR-3B returns. As a result, the Court deemed it necessary to intervene and set aside the assessment orders.
The Court has remanded the matters back for re-consideration by the assessing officer. The petitioner has been granted permission to present all relevant documents supporting their ITC claims. The assessing officer is directed to provide the petitioner with a reasonable opportunity, including a personal hearing, before issuing fresh assessment orders.
This ruling underscores the importance of a thorough examination of all available documents and returns when assessing ITC claims. Taxpayers can now rely on this precedent to ensure that their rightful claims for Input Tax Credit are duly considered and not dismissed solely based on one form of return.
To Access the CBIC Notification 6/2024-CT Dated 22 february 2024 CLICK HERE
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