Madras High Court allows GSTR-3B Filing without Payment of Tax for Claiming ITC [Read Order]

The Petitioner was issued notice dated 27.04.2022 and where he was directed to show cause why there was a belated claim of Input Tax Credit (ITC).

He was also directed to reverse the same as wrong claim of ITC.

Some of the issues Quoted by Petitioner:

GSTR-3B submitted physically

The petitioner submitted that due to financial crisis the petitioner had submitted GSTR-3B physically for availing ITC, as the GSTN portal did not allow filing of GSTR-3B on Online mode due to Non-Payment of Taxes.

GSTR-2 Non-Operational

As per petioner Filing Form GSTR-3B is for avail the input tax credit and not for claiming the same. Form GSTR-2 was prescribed for claim of ITC, but same was never notified. So the reversal of input tax for belated claim as per Section 16(4) of TNGST Act is not applicable, since the filing of GSTR3B is not meant for claim of input tax credit.

Difference Between Claiming and availing ITC

The further contention of the petitioner is that the sales made to the petitioner and the tax collected from the petitioner were duly reported by other end supplier through their respective GSTR-1 and the petitioner could not claim the same since Form GSTR-2 is not notified.

Hence, the petitioner has accounted the purchases and credited the tax payment made through tax invoice, claimed ITC in the books of accounts and availed the same through GSTR-3B filed physically. Hence, the allegation of belated claim of ITC itself is false and misleading.

GSTR-3B not a Return

GSTR-3B is not at all returned as prescribed in Section 39 of the TNGST Act.

As per Notification No.49 of 2019 (Central Tax), dated 09.10.2019, the Government declared that the reconciliation statement GSTR-3B may be treated as GSTR-3 in retrospective manner and the same is not correct and the same is against the Constitution.

Order of Madras High Court:

Court has held that in the absence of any enabling mechanism, the assessee cannot be prejudiced by not granting ITC.

Hence if the GSTN provided an option for filing GSTN without payment of tax or incomplete GSTR-3B, the dealer would be eligible to claim of input tax credit. The same was not provided in the GSTN network hence, the dealers are restricted to claim ITC on the ground of non-filing of GSTR-3B within the prescribed time. If the option of filing incomplete filing of GSTR-3B is provided in the GSTN network the dealers would avail the claim and determine self-assessed ITC in online.

The respondents shall permit the petitioner to file manual returns whenever the petitioner is claiming ITC on the outward supply/ sales without paying taxes. Further, the respondents are directed to accept the belated returns and if the returns are otherwise in order and in accordance with law, the claim of ITC may be allowed.

Read Judgement