Facts of the Case

M/s Urban Gear Gifts LLP, engaged in trading corporate gifts, received supplies from M/s Scope Amra Enterprises LLP during FY 2019-20. Although Scope Amra had disclosed the transaction and discharged its tax liability in GSTR-3B, it had failed to reflect the same in GSTR-1, resulting in the petitioner being denied ITC. Adjudication orders dated 18.07.2024 (Annexure-C) and a summary order dated 22.08.2024 (Annexure-D) were passed against the petitioner under Sections 73(10), 73(9), 50 and 122 of the KGST/CGST Act, 2017 for tax periods April 2019 to March 2020. The petitioner could not place documents evidencing Scope Amra's GSTR-3B disclosure and DRC-05 proceedings before the adjudicating officer, as these came to its knowledge only later.

Issues Involved

  1. Whether ITC denial for a supplier's GSTR-1 non-disclosure can be reconsidered where the supplier had, in fact, disclosed and discharged the liability in GSTR-3B, confirmed by a DRC-05 in the supplier's own proceedings.
  2. Whether the benefit of CBIC Circular No. 183/15/2022-GST, ordinarily applicable to FY 2017-18 and 2018-19, can be extended to FY 2019-20 following the coordinate Bench decision in Wipro Limited.

Petitioner's Arguments

  • The tax liability on the transaction had already been discharged by Scope Amra; the petitioner could not avail the GST benefit only because of a disclosure mismatch, and the relevant documents (which surfaced later) should now be placed before the adjudicating authority.
  • Reliance was placed on M/s. Wipro Limited India Company v. Assistant Commissioner of Central Taxes (WP No. 16175/2022, decided 06.01.2023) extending Circular No. 183/15/2022-GST beyond its stated years.

Respondent's Arguments

  • Had these documents been furnished at the relevant time, they would have been considered; since the orders now stand passed, the question of considering them afresh does not arise.

Court Order / Findings

  • The Court found it undisputed that Scope Amra had discharged GST liability on the supply, and that the petitioner's inability to place the relevant documents earlier was on account of their belated availability.
  • Relying on Wipro Limited, where the benefit of Circular No. 183/15/2022-GST was extended even to years beyond those it explicitly covers, the Court set aside the adjudication order dated 18.07.2024 and the order dated 22.08.2024, remitting the matter for fresh consideration in light of the documents relating to Scope Amra's proceedings.
  • The petitioner was directed to appear before the second respondent on a fixed date without further notice.

Important Clarification

  • Where a supplier has disclosed a transaction and discharged tax liability in GSTR-3B but omitted it from GSTR-1, and this discrepancy is later confirmed through the supplier's own DRC-05 proceedings, the recipient's ITC denial on this ground alone is open to reconsideration, and the benefit extended by CBIC Circular No. 183/15/2022-GST for FY 2017-18/2018-19 has been extended by coordinate Bench rulings to subsequent years as well.

Sections Involved

  • Section 73 of the KGST/CGST Act, 2017 — determination of tax for reasons other than fraud.
  • Section 50 of the CGST Act, 2017 — interest on delayed payment.
  • Section 122 of the CGST Act, 2017 — penalty for certain offences.
  • CBIC Circular No. 183/15/2022-GST — clarification on ITC mismatch between GSTR-3B and GSTR-2A/GSTR-1.

Decision – In Favour of

Assessee — orders set aside and matter remitted for fresh consideration.

Case Details

High Court of Karnataka at Bengaluru; WP No. 17685 of 2025 (T-RES); Coram: Hon'ble Mr. Justice Suraj Govindaraj; Date: 16.07.2025.

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