Facts of the Case

Mina Bazar, a partnership firm at Payyanur, challenged an assessment order dated 20.08.2022 and a consequent recovery notice dated 24.07.2023, by which input tax credit was denied to the petitioner solely on the ground of a difference between the figures reflected in Form GSTR-2A and those claimed by the petitioner in Form GSTR-3B for the year 2017-18.

Issues Involved

  1. Whether input tax credit can be denied to a registered person merely because the credit claimed in GSTR-3B does not match or is not reflected in the auto-populated GSTR-2A.

Petitioner's Arguments

  • The only ground for denial of ITC in the assessment order was the mismatch between GSTR-2A and GSTR-3B, and the petitioner should be permitted to establish the genuineness of the underlying purchase transactions through independent evidence, irrespective of what is or is not auto-populated in GSTR-2A.

Respondent's Arguments

  • The impugned assessment order was based on the discrepancy between the GSTR-2A and GSTR-3B returns as detected during assessment for the relevant year.

Court Order / Findings

  • The Court relied on its own recent 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 decision in Suncraft Energy Private Limited v. The Assistant Commissioner, State Tax.
  • Input tax credit under the GST regime cannot be denied to a registered person merely on the ground of a difference between Form GSTR-2A and Form GSTR-3B; the assessing officer must independently examine the evidence produced by the assessee and grant ITC if genuinely satisfied of its bona fides, rather than mechanically relying on the auto-populated GSTR-2A figures.
  • The writ petition was allowed and the matter remitted to the Assessing Authority to examine the petitioner's evidence irrespective of the GSTR-2A figures, and pass fresh orders in accordance with law after the petitioner appears with supporting evidence on a fixed date.

Important Clarification

  • A mere mismatch between the auto-populated Form GSTR-2A and the taxpayer's claimed input tax credit in Form GSTR-3B is not, by itself, a sufficient ground to deny ITC; the assessing authority is obliged to examine the taxpayer's supporting evidence (invoices, payment proof, etc.) on its own merits before denying or confirming the credit, consistent with the Supreme Court's approach in Ecom Gill Coffee Trading.

Sections Involved

  • Section 16, CGST/SGST Act, 2017 - eligibility and conditions for taking input tax credit.
  • Form GSTR-2A - auto-populated statement of inward supplies for the recipient.
  • Form GSTR-3B - summary return in which ITC is claimed by the registered person.

Decision – In Favour of

The writ petition was allowed in favour of the Assessee, with the denial of ITC set aside and the matter remitted for fresh examination of evidence.

Case Details

Court: High Court of Kerala at Ernakulam
Case No.: WP(C) No. 30670 of 2023
Coram: Justice Dinesh Kumar Singh
Date of Order: 19.09.2023

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