Facts of the Case

The petitioner, Kishore Projects Private Limited, a company engaged in construction and civil engineering activities and registered under the CGST/GGST Acts, challenged an order dated 07.04.2022 passed under Section 73 of the CGST/GGST Act. The adjudicating authority raised a demand of ₹31,95,464, comprising:

  • Tax: ₹20,22,446
  • Interest: ₹9,70,774
  • Penalty: ₹2,02,244

The demand arose due to an alleged mismatch between Input Tax Credit (ITC) claimed in GSTR-3B and ITC reflected in GSTR-2A for FY 2019-20.

The petitioner contended that the mismatch occurred because the suppliers failed to file their GST returns, despite the petitioner having received goods, paid the invoice value along with GST through banking channels, and possessing valid tax invoices. During scrutiny under Section 61, the petitioner filed a reply explaining the reason for the mismatch. However, proceedings under Section 73 culminated in the impugned demand order.

The petitioner also failed to file the statutory appeal within the prescribed limitation under Section 107 due to unavoidable personal circumstances, including the death of his mother and serious illness of his sister. After the bank account was provisionally attached, the petitioner approached the Gujarat High Court under Article 226 of the Constitution.

 

Issues Involved

  1. Whether ITC can be denied merely because the supplier failed to upload invoices resulting in a mismatch between GSTR-2A and GSTR-3B.
  2. Whether Form GSTR-2A is conclusive evidence for determining admissibility of ITC.
  3. Whether the High Court can permit the petitioner to pursue the statutory appeal despite expiry of limitation prescribed under Section 107 considering exceptional circumstances.
  4. Whether relief should be granted where the petitioner had otherwise complied with the substantive requirements for availing ITC.

 

Petitioner's Arguments

  • The petitioner had genuinely purchased goods from registered suppliers.
  • GST invoices were duly issued and payments, including GST, were made through banking channels.
  • The ITC mismatch occurred solely because suppliers failed to file their GST returns.
  • During scrutiny proceedings under Section 61, a detailed explanation was submitted through Form GST ASMT-11.
  • Reliance was placed on the Supreme Court judgment in Union of India vs. Bharti Airtel Ltd. (2022) 4 SCC 328, wherein it was held that Form GSTR-2A is only a facilitator for self-assessment and not the sole basis for determining ITC entitlement.
  • The appeal could not be filed within limitation due to extraordinary family circumstances, and therefore equitable relief should be granted.

 

Respondent's Arguments

  • The department submitted that there existed an ITC mismatch of ₹20,22,446 between GSTR-2A and GSTR-3B.
  • It was argued that Section 107 prescribes a strict limitation period for filing an appeal, and the appellate authority has no statutory power to condone delay beyond the prescribed period.
  • Therefore, the petitioner could not ordinarily be permitted to pursue the appeal after expiry of limitation.

 

Court Order / Findings

The Gujarat High Court allowed the writ petition.

The Court relied upon the Supreme Court decision in Union of India vs. Bharti Airtel Ltd., (2022) 4 SCC 328, which categorically held that:

  • Form GSTR-2A is merely a facilitator to enable a registered person to make an informed decision during self-assessment.
  • ITC cannot automatically be denied solely because invoices are not reflected in GSTR-2A.

Considering this legal position and the petitioner's genuine personal hardships, the Court held that substantial justice required an opportunity to contest the matter on merits.

Accordingly, the Court:

  • Permitted the petitioner to approach the appellate authority.
  • Directed the appellate authority not to reject the appeal on the ground of limitation.
  • Directed the appellate authority to decide the appeal on merits.
  • Ordered the petitioner to deposit ₹2,02,245 as statutory pre-deposit within two weeks.
  • Directed that upon such deposit, the petitioner would be entitled to seek release of the provisionally attached bank account, and the appellate authority should decide that request within one week.

 

Important Clarification

This judgment reiterates that:

  • GSTR-2A is only a facilitative document and not the final determinant of ITC eligibility.
  • ITC disputes arising solely due to supplier default require adjudication based on the complete facts and evidence.
  • In exceptional cases involving genuine hardship, the High Court may exercise its writ jurisdiction to permit adjudication on merits despite statutory limitation.
  • Courts may balance procedural requirements with the principles of natural justice where denial of appellate remedy would result in substantial injustice.

 

Sections Involved

  • Article 226 – Constitution of India
  • Section 61 – Scrutiny of Returns
  • Section 73 – Determination of Tax Not Paid or Short Paid Without Fraud
  • Section 107 – Appeals to Appellate Authority
  • Relevant provisions relating to Input Tax Credit (ITC), GSTR-2A and GSTR-3B reconciliation


Link to Download the Order https://www.mytaxexpert.co.in/uploads/1782894636_69.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.