Facts of the Case

Lajeesh Babu, proprietor of E B S Cranes & Transports, Poonithura, Ernakulam, a registered dealer under the Central Goods and Services Tax (CGST) Act and the State Goods and Services Tax (SGST) Act, filed WP(C) No. 33214 of 2023 before the Kerala High Court challenging Exhibit P-2 recovery notice dated 05.09.2023 and Exhibit P-4 adjudication order dated 01.02.2022. The petitioner had received supplies from M/s. T.V. Sundaram Iyengar & Sons Private Limited, a registered GST dealer, during financial year 2017-18, and claimed input tax credit (ITC) on that supply. However, the supplier did not correctly mention the petitioner's GSTIN in its FORM GSTR-1, so the tax paid on the supply was not reflected in the petitioner's FORM GSTR-2A; the supplier was also unable to amend FORM GSTR-1 within time. On this ground, the Assessing Officer denied the petitioner's ITC claim in Exhibit P-4. The matter was heard and decided by Justice Dinesh Kumar Singh on 31.10.2023.

Issues Involved

  1. Whether denial of ITC merely because the supply was not reflected in FORM GSTR-2A, due to the supplier's bona fide error in mentioning the wrong GSTIN, was sustainable.
  2. Whether CBIC Circular No.183/15/2022-GST dated 27.12.2022 applied to save the petitioner's ITC claim for FY 2017-18.
  3. What conditions, if any, should attach to a remand of the matter for fresh consideration.

Petitioner's Arguments

  • The petitioner relied on Circular No.183/15/2022-GST, which was issued to address difficulties faced by assessees in the initial GST years (FY 2017-18 and 2018-19) where a supplier had filed FORM GSTR-1 and GSTR-3B but mentioned the wrong GSTIN of the recipient, causing the supply to not reflect in the recipient's FORM GSTR-2A.
  • Paragraph 4 of the Circular required the proper officer to verify possession of a tax invoice, actual receipt of goods, and payment of the value of supply along with tax, before denying credit — conditions the petitioner claimed to satisfy.
  • Counsel placed strong reliance on the Kerala High Court's own decision in Diya Agencies v. State of Kerala (WP(C) No.29769 of 2023), where it was held that mere non-reflection of tax in FORM GSTR-2A is not by itself sufficient to deny a genuine ITC claim, and the matter should be remanded to allow the assessee to lead evidence.
  • The petitioner argued that this being the initial year of GST implementation, several bona fide difficulties were experienced by taxpayers, which the Circular itself was designed to address.

Respondent's Arguments

  • The Government Pleader appearing for the State GST Department did not dispute that the supplier had filed FORM GSTR-1 and FORM GSTR-3B for the period, or that the mismatch arose from an incorrect GSTIN entry by the supplier rather than any act of the petitioner.
  • No independent challenge was raised to the applicability of Circular No.183/15/2022-GST to the facts of the case; the order records no separate substantive defence beyond reliance on the assessing officer's original order denying credit for want of reflection in FORM GSTR-2A.

Court Order/Findings

  • The Court found that the petitioner's case squarely fell within CBIC Circular No.183/15/2022-GST, which lays down a verification procedure for allowing ITC where the supplier has filed GSTR-1 and GSTR-3B but wrongly mentioned the recipient's GSTIN.
  • Relying on Diya Agencies v. State of Kerala, the Court reiterated that mere non-reflection of tax in FORM GSTR-2A cannot by itself be a sufficient ground to deny a genuine and bona fide ITC claim.
  • The impugned Exhibit P-2 recovery notice and Exhibit P-4 adjudication order were set aside, and the matter was remanded to the assessing authority to reconsider the petitioner's ITC claim for FY 2017-18 after affording an opportunity to lead evidence in terms of the Circular.
  • As a condition of remand, the petitioner was directed to deposit 10% of the assessed amount within fifteen days and to appear before the Assessing Authority on 20.11.2023 with all supporting documents; the deposited amount was made subject to the final outcome of the fresh assessment.

Important Clarification

  • Denial of ITC solely on the ground that the supply is not reflected in FORM GSTR-2A, where the mismatch is attributable to the supplier's bona fide error (such as a wrong GSTIN in FORM GSTR-1), is not sustainable in light of CBIC Circular No.183/15/2022-GST.
  • Under paragraph 4 of the Circular, the proper officer must verify possession of a tax invoice, actual receipt of goods/services, and payment of consideration including tax, and may call for a Chartered Accountant/Cost Accountant certificate (where the mismatch exceeds Rs 5 lakh per supplier) or a supplier certificate (where it is up to Rs 5 lakh) before deciding the claim.
  • The Circular's relaxation is expressly stated to be inapplicable, by virtue of the proviso to Section 16(4) of the CGST Act, to ITC claimed in a FORM GSTR-3B return filed after the due date for September 2018 up to the due date for March 2019, where the supplier had not furnished the supply details in FORM GSTR-1 by the due date for March 2019 — a nuance assessing authorities are expected to apply on remand.

Sections Involved

  • Section 16 of the CGST Act, 2017 – lays down the conditions for availment of input tax credit, including possession of invoice, receipt of goods/services, and payment of tax.
  • Section 16(4) of the CGST Act, 2017 – prescribes the time limit for availing ITC, with a proviso specifically addressing FY 2017-18 claims.
  • Sections 17 and 18 of the CGST Act, 2017 – govern reversal of input tax credit, relevant to the verification the assessing officer must undertake.
  • CBIC Circular No.183/15/2022-GST dated 27.12.2022 – clarifies the procedure for allowing ITC despite GSTR-1/GSTR-2A mismatches for FY 2017-18 and 2018-19.

Decision – In Favour of

The writ petition was allowed and the recovery notice and adjudication order set aside, making this substantially a win for the Assessee — though relief was conditional on a 10% pre-deposit and a fresh assessment on remand, so the ultimate outcome on the ITC claim itself remains to be determined by the Assessing Authority.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: Kerala High Court, Ernakulam
  • Case No.: WP(C) No. 33214 of 2023
  • CNR: Not available on record
  • Coram: Justice Dinesh Kumar Singh
  • Decision Date: 31.10.2023
  • Disposal Nature: Allowed (remanded, subject to 10% pre-deposit)

Link to Download the Order

Download the full judgment (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.