ITC cannot be denied for difference in GSTR-2A and GSTR-3B for tax period 2017-2018: HC

The Kerala High Court in the matter of RAJU JOSEPH Vs. STATE TAX OFFICER has held that ITC cannot be denied for difference in GSTR-2A and GSTR-3B for tax period 2017-2018.

The petitioner is a registered dealer under the provisions of Central Goods and Services Tax (CGST) Act as well as the State Goods and Services Tax (SGST) Act. On a perusal of the records in the writ petition, it appears that the only ground on which the petitioner has been said to have availed excess input tax credit is the difference between Form GSTR 2A and Form GSTR 3B for the tax period 2017-18.

The Learned Counsel for the petitioner submits that the Government of India, Department of Revenue, Central Goods Indirect Tax and Customs considered the difficulties faced by the assessees in the initial year in respect of difference in input tax availed in Form GSTR 3B as compared to that received in form GSTR 2A for the financial year 2017-18 and 2018-19 and has issued clarification vide Circular No.183/15/2022-GST dated 27.12.2022, and it has been said that where the supplier has filed GSTR–1 as well as return in Form GSTR–3B for a tax period, but has declared the supply with the wrong GSTIN of the recipient in Form GSTR–1, the difference regarding the input tax credit claim by the recipient dealer in its Form GSTR–3B, but it is not reflected in Form GSTR–2A because of the wrong GSTIN of the recipient, the procedure has to be followed as amended in paragraph 4 of the Circular dated 27.12.2022.

Paragraph 4 of the said Circular reads as follows:

“4. The proper officer shall first seek the details from the registered person regarding all the invoices on which ITC has been availed by the registered person in his FORM GSTR 3B but which are not reflecting in his FORM GSTR 2A. He shall then ascertain fulfilment of the following conditions of Section 16 of CGST Act in respect of the input tax credit availed on such invoices by the said registered person:

i) that he is in possession of a tax invoice or debit note issued by the supplier or such other tax paying documents;

ii) that he has received the goods or services or both;

iii) that he has made payment for the amount towards the value of supply, along with tax payable thereon, to the supplier.

Besides, the proper officer shall also check whether any reversal of input tax credit is required to be made in accordance with section 17 or section 18 of CGST Act and also whether the said input tax credit has been availed within the time period specified under sub-section (4) of section 16 of CGST Act.

4.1 In order to verify the condition of clause (c) of sub-section (2) of Section 16 of CGST Act that tax on the said supply has been paid by the supplier, the following action may be taken by the proper officer:

4.1.1 In case, where difference between the ITC claimed in FORM GSTR-3B and that available in FORM GSTR 2A of the registered person in respect of a supplier for the said financial year exceeds Rs 5 lakh, the proper officer shall ask the registered person to produce a certificate for the concerned supplier from the Chartered Accountant (CA) or the Cost Accountant (CMA), certifying that supplies in respect of the said invoices of supplier have actually been made by the supplier to the said registered person and the tax on such supplies has been paid by the said supplier in his return in FORM GSTR 3B. Certificate issued by CA or CMA shall contain UDIN. UDIN of the certificate issued by CAs can be verified from ICAI website and that issued by CMAs can be verified from ICMAI website.

4.1.2 In cases, where difference between the ITC claimed in FORM GSTR-3B and that available in FORM GSTR 2A of the registered person in respect of a supplier for the said financial year is upto Rs. 5 lakh, the proper officer shall ask the claimant to produce a certificate from the concerned supplier to the effect that said supplies have actually been made by him to the said registered person and the tax on said supplies has been paid by the said supplier in his return in FORM GSTR 3B.

4.2 However, it may be noted that for the period FY 2017-18, as per proviso to section 16(4) of CGST Act, the aforesaid relaxations shall not be applicable to the claim of ITC made in the FORM GSTR-3B return filed after the due date of furnishing return for the month of September, 2018 till the due date of furnishing return for March, 2019, if supplier had not furnished details of the said supply in his FORM GSTR-1 till the due date of furnishing FORM GSTR 1 for the month of March, 2019.”

Paragraph 5 of the Circular also clarifies that the Circular would be applicable in respect of bona fide errors committed in reporting during financial years 2017-18 and 2018-19 and the guidelines issued for reconciliation of the input tax credit claimed in Form GSTR -3B and Form GSTR-2 and as reflected in Form GSTR – 2A are clarificatory in nature and may be applied to the facts and circumstances of each case.

Considering these facts and taking into consideration Circular No.183/15/2022-GST dated 27.12.2022, the present writ petition is allowed. The impugned Exts. P5 and P5(a) orders dated 14.06.2023 and 16.06.2023 are set aside.

The matter is remitted back to the Assessing Authority to reconsider the case of the petitioner irrespective of the Form GSTR 2A for the petitioner’s claim of the input tax credit. However, the petitioner shall deposit 10% of the amount assessed within a period of fifteen days and appear before the Assessing Authority with all the documents and evidence in his possession for passing fresh orders in accordance with the law.

If, on consideration of the evidence and materials and also the Circular, the Assessing Authority is of the opinion that the petitioner’s claim for input tax credit for the financial year 2017-18 is not justified, the petitioner shall be liable to remit the remaining amount. The 10% of the amount assessed paid by the petitioner shall be subject to the final decision of the Assessing Authority. The petitioner shall appear before the Assessing Authority on 30.11.2023 at 11.00 a.m., complying with all the directions as above.

For Official Judgment Download PDF Given Below: