ITC Should Not be Denied Merely Because of Difference Between GSTR-2A and GSTR-3B: Kerala High Court Order for Raju Joseph
In a recent development, the Kerala High Court has issued a directive instructing the Assessing Authority to revisit the denial of Input Tax Credit (ITC) to a petitioner, Mr. Raju Joseph, the proprietor of Future Graphic Systems in Alappuzha. The denial was primarily based on variations in ITC figures between the GST returns GSTR 2A and GSTR 3B. This move comes in response to a Writ Petition challenging the validity of orders issued by the State Goods and Services Tax (SGST) Department.
Background of the Case
The petitioner argued against the rejection of their GST Input Tax Credit, citing genuine errors and challenges faced during the initial implementation years of GST. Circular No.183/15/2022-GST from the Government of India, Department of Revenue, played a crucial role in the petitioner’s defence. The circular addressed situations where a supplier’s GSTR–1 and GSTR–3B indicated the supply with an incorrect GSTIN of the recipient in GSTR–1.
Key Points from Circular No.183/15/2022-GST
Verification Process: The circular highlighted the process for the proper officer to verify and request details from the registered person regarding invoices where ITC was claimed in GSTR 3B but not reflected in GSTR 2A.
Compliance with Section 16: Emphasis on compliance with Section 16 of the Central Goods and Services Tax (CGST) Act, 2017, specifying the necessity of valid documents like tax invoices, proof of goods or services receipt, and payment to the supplier.
ITC Reversals: Guidelines for officers to inspect ITC reversals under sections 17 or 18 of the CGST Act, 2017, and the stipulated timeframe for claiming credit.
Tax Payments Verification: Procedures to confirm if the supplier paid taxes on supplies to the government exchequer, with additional requirements for discrepancies exceeding Rs.5 lakh.
Court Ruling
The Kerala High Court, citing a prior ruling in Diya Agencies v. State of Kerala, emphasized that the refusal of Input Tax Credit merely due to differences between GSTR-2A and GSTR-3B lacks a strong foundation. The court instructed a reevaluation of the petitioner’s case by the Assessing Authority, irrespective of the disparities in Form GSTR 2A and GSTR-3B.
Conclusion
Justice Dinesh Kumar Singh, presiding as a single bench, concluded that valid ITC claims should not be dismissed solely based on differences between GSTR-2A and GSTR-3B. The court stressed the importance of claimants fulfilling all prerequisites for claiming ITC, as specified under Section 16 of the CGST Act, 2017.
This landmark decision underscores the need for a thorough review of ITC denials, taking into account genuine errors and compliance with the regulatory framework. Businesses are encouraged to adhere to the guidelines laid out in Circular No.183/15/2022-GST to ensure a smoother and more transparent GST filing process.
To Access the CBIC Notification No. 54/2023-CT CLICK HERE
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