Facts of the Case

The petitioner, proprietor of 'M/s Light House' at Alappuzha, had his claimed input tax credit of Rs.98,479/- each under CGST and SGST denied for FY 2017-18 by the assessing authority, along with levy of interest (Rs.92,031/- each under CGST/SGST) and penalty (Rs.10,000/- each), taking the total demand to Rs.4,01,020/-. A show cause notice under Section 73(1) had been issued on 16.09.2021, but the petitioner neither replied nor attended the personal hearing fixed for 16.02.2022; the assessing authority accordingly relied only on Forms GSTR-2A and GSTR-3B to deny the credit. The petitioner challenged the assessment order dated 28.12.2022 before the Kerala High Court.

Issues Involved

  1. Whether the petitioner, having neither replied to the show cause notice nor availed the personal hearing, could still succeed in a writ challenge to the ITC denial.
  2. On whom the burden lay to prove the correctness of an ITC claim where GSTR-2A and GSTR-3B figures differ.

Petitioner's Arguments

The petitioner's counsel appeared before the Court but the order does not record any substantive factual explanation for the earlier failure to reply or attend the hearing, nor was fresh documentary evidence placed before the Court to substantiate the ITC claim.

Respondent's Arguments

No separate contest is recorded from the Department; the assessment stood on the record as passed, the petitioner having forfeited the opportunity to place evidence before the assessing authority.

Court Order / Findings

  • The Court extracted Section 16(2) of the CGST/SGST Act, which begins with a non-obstante clause and conditions ITC eligibility on possession of a valid tax invoice, receipt of goods or services, actual payment of the tax charged to Government, and furnishing of the return.
  • The Court also referred to Section 155, which places the burden of proving an ITC claim's eligibility squarely on the person claiming it.
  • The Court held that where there is a difference between GSTR-2A and GSTR-3B, it is for the assessee to prove the claim by leading cogent and credible evidence, and since the petitioner had chosen not to provide any evidence in response to the show cause notice nor appear for the hearing on the date fixed, he had effectively given up his right to prove the claim.
  • The Court held it could not assist an assessee who had forfeited his own opportunity to substantiate the claim, and found no substance in the writ petition, which was accordingly rejected.

Important Clarification

  • A GSTR-2A/GSTR-3B mismatch alone does not automatically defeat an ITC claim, but the burden under Section 155 of the GST Act to prove the claim's correctness rests entirely on the taxpayer — and a taxpayer who neither replies to the show cause notice nor attends the personal hearing forfeits the opportunity to discharge that burden, making the resulting denial difficult to reopen in writ jurisdiction.

Sections Involved

  • Section 16(2), Central Goods and Services Tax Act, 2017 – conditions for input tax credit eligibility.
  • Section 155, Central Goods and Services Tax Act, 2017 – places the burden of proving entitlement to input tax credit on the claimant.

Decision – In Favour of

The decision is in favour of the Department — the writ petition challenging the ITC denial was dismissed for the petitioner's failure to substantiate his claim despite opportunity.

Case Details

Court: High Court of Kerala at Ernakulam
Case No.: WP(C) No.31165 of 2023
Coram: Justice Dinesh Kumar Singh
Date of Order: 25.09.2023

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