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Facts of the Case

Mina Bazar, represented by its partner M.T.P. Mohammed Shihab, challenged an assessment order dated 20.08.2022 and a consequential recovery notice dated 24.07.2023 before the Kerala High Court. The assessment order had denied Input Tax Credit to the petitioner solely on account of a difference between Form GSTR-2A and Form GSTR-3B, without examining any other evidence the petitioner may have had to substantiate its ITC claim.

Issues Involved

  1. Whether Input Tax Credit can be denied to a taxpayer solely on the ground of a mismatch between GSTR-2A and GSTR-3B, without examining the taxpayer's other supporting evidence.
  2. Whether the assessing officer is obliged to give the taxpayer a fresh opportunity to substantiate its ITC claim through evidence beyond the auto-populated GSTR-2A.

Petitioner's Arguments

  • The petitioner relied on the Kerala High Court's own decision in Diya Agencies v. The State Tax Officer, which in turn applied the Supreme Court's ruling in The State of Karnataka v. M/s Ecom Gill Coffee Trading Private Limited and the Calcutta High Court's ruling in Suncraft Energy Private Limited, to argue that ITC cannot be denied merely because of a GSTR-2A/3B mismatch.
  • It was submitted that the assessing officer must be directed to examine the petitioner's other evidence before denying the claim.

Respondent's Arguments

  • No independent defence appears to have been separately advanced by the department beyond the assessment order's own reasoning that ITC was disallowed on account of the GSTR-2A/GSTR-3B mismatch.

Court Order / Findings

  • Following its own precedent in Diya Agencies, the Court held that Input Tax Credit under the GST regime cannot be denied merely on the ground of a difference between GSTR-2A and GSTR-3B, and that the assessing officer must independently examine the evidence submitted by the taxpayer.
  • The writ petition was allowed and the matter remitted to the Assessing Authority to examine the petitioner's evidence, irrespective of the GSTR-2A mismatch, and to pass fresh orders in accordance with law after the petitioner appears with all supporting evidence.

Important Clarification

  • A mere mismatch between the auto-populated GSTR-2A and the taxpayer's self-reported GSTR-3B is not, by itself, sufficient ground to deny Input Tax Credit; the assessing authority must examine other evidence — invoices, payment proof, and related documentation — before rejecting the claim as not bona fide.
  • This principle, rooted in the Supreme Court's Ecom Gill Coffee Trading ruling and followed consistently by the Kerala High Court, places the onus on the department to conduct a substantive enquiry rather than mechanically reject ITC based on a portal-level reconciliation gap.

Sections Involved

  • Form GSTR-2A and Form GSTR-3B – the auto-populated inward-supply statement and the self-assessed summary return respectively, whose mismatch triggered the ITC denial.
  • CGST/SGST Act, 2017 – governs eligibility and conditions for claiming Input Tax Credit.

Decision – In Favour of

The decision is in favour of the assessee. The assessment order denying ITC solely for the GSTR-2A/3B mismatch was set aside, and the matter remitted for fresh examination of the petitioner's evidence.

Case Details

Court: High Court of Kerala at Ernakulam
Case No.: WP(C) No. 30670/2023
CNR / Citation: Not available in judgment text
Coram: Hon'ble Mr. Justice Dinesh Kumar Singh
Date of Order: 19 September 2023

Link to Download the Order

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