Facts of the Case

The petitioner, Diya Agencies, a proprietary concern at Kayamkulam, Alappuzha, challenged an assessment order (Exhibit P-1) for FY 2017-18 that limited its claimed input tax credit of Rs.44,51,943.08/- (CGST and SGST) by disallowing an excess claim of Rs.1,04,376.05/- under each head, solely on the ground that the corresponding amount was not reflected in Form GSTR-2A. A revenue recovery notice followed. The petitioner approached the Kerala High Court challenging the assessment.

Issues Involved

  1. Whether a claim of input tax credit can be denied merely because the amount is not reflected in the recipient's Form GSTR-2A, over which the recipient has no control.
  2. On whom does the burden lie to prove entitlement to input tax credit where a GSTR-2A/GSTR-3B mismatch exists.

Petitioner's Arguments

  • The petitioner argued that ITC cannot be denied merely on account of the figure shown in GSTR-2A, which is generated based on the supplier's filings and beyond the recipient's control, relying on the Calcutta High Court's ruling in Suncraft Energy Pvt. Ltd. v. Assistant Commissioner, State Tax (MAT 1218 of 2023) and the Supreme Court's ruling in State of Karnataka v. M/s. Ecom Gill Coffee Trading Pvt. Ltd., 2023 (3) TMI 533 SC.
  • It was submitted that the Assessing Authority must independently examine the ITC claim irrespective of the GSTR-2A figure, provided the conditions of Section 16(2) — possession of a valid tax invoice, receipt of goods/services, and actual tax payment to Government — are satisfied, and that the petitioner cannot be made to pay again if its supplier failed to remit the tax.

Respondent's Arguments

The order does not record a separate substantive defence beyond the assessing authority's reliance on the GSTR-2A figure as recorded in the impugned assessment.

Court Order / Findings

  • The Court examined Section 16(2)'s non-obstante conditions for ITC eligibility and referred to the CBIC's press release dated 18.10.2018, clarifying that GSTR-2A is a facilitation tool and does not itself restrict a taxpayer's ability to avail ITC on self-assessment under Section 16, and to the Supreme Court's ruling in Union of India v. Bharti Airtel Ltd., (2022) 4 SCC 328, describing GSTR-2A similarly as a facilitator.
  • The Court also noted the Calcutta High Court's holding in Suncraft Energy that before reversing ITC, the department should first proceed against the selling dealer if the tax was not deposited, and that ITC should not be denied absent proof of collusion where the assessee genuinely paid tax to the seller.
  • Applying the Supreme Court's ruling in Ecom Gill Coffee Trading (decided under the analogous KVAT provision), the Court held that the burden of proving an ITC claim's correctness lies squarely on the purchasing dealer, who must establish the genuineness of the transaction with evidence beyond mere invoices or cheque payments — such as supplier details, vehicle/delivery particulars, freight payment and acknowledgment of delivery.
  • The Court found the assessment order unsustainable to the extent ITC was denied solely because the amount was absent from GSTR-2A, without examining whether the petitioner could otherwise discharge this burden.
  • The matter was remanded to the Assessing Officer to give the petitioner an opportunity to prove its ITC claim with evidence within fifteen days; if satisfied the claim is bona fide and genuine, ITC is to be granted notwithstanding the GSTR-2A gap.

Important Clarification

  • Input tax credit cannot be denied solely because the amount does not appear in the recipient's Form GSTR-2A — that form is a facilitation tool, not a bar on availing credit under Section 16.
  • However, this does not shift the burden to the department: under Section 155 of the GST Act and per the Supreme Court's ruling in Ecom Gill Coffee Trading, the burden of proving genuine entitlement to ITC (supplier details, delivery evidence, actual tax payment) always rests on the claimant, who must be given a real opportunity to discharge it.

Sections Involved

  • Section 16(2), Central Goods and Services Tax Act, 2017 – conditions for eligibility to input tax credit.
  • Section 155, Central Goods and Services Tax Act, 2017 – places the burden of proving an ITC claim on the person claiming it.

Decision – In Favour of

The decision is in favour of the Assessee in part — the assessment order denying ITC solely on GSTR-2A grounds was found unsustainable and remanded, but final entitlement was left to the petitioner discharging its burden of proof afresh.

Case Details

Court: High Court of Kerala at Ernakulam
Case No.: WP(C) No.29769 of 2023
Coram: Justice Dinesh Kumar Singh
Date of Order: 12.09.2023

Link to Download the Order

Click here to view/download the full order

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.