Mere Absence of GSTN in Supplier Certificate Not Sufficient to Deny ITC Claim: Allahabad HC [Read Order]

In a recent ruling, the Allahabad High Court ruled that the absence of GSTN in a supplier’s certificate alone is not a valid ground for denying the Input Tax Credit ( ITC ) and directed the tax authorities to reconsider the petitioner’s claim.

Bhagwan Das Agrahari, a business entity, filed a writ petition challenging orders passed by the State of Uttar Pradesh and two other respondents. The dispute arose from proceedings initiated under Section 73 of the UP GST Act, where the petitioner was accused of wrongly availing ITC. The petitioner’s appeal against the tax authorities' decision was dismissed without proper evaluation of the evidence.

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The petitioner relied on a government circular dated 27.12.2022, which specifies that when the supply value is below Rs. 5 lakh, a supplier’s certificate is sufficient to validate ITC claims. In compliance with this circular, the petitioner submitted all required supplier certificates. The tax department disregarded these documents, arguing that GSTN numbers were not mentioned, and subsequently denied the ITC claim.

The department defended its decision, stating that the petitioner failed to establish the genuineness of the transactions. The department asserted that ITC was wrongly claimed and that the orders denying credit were legally justified.

The petitioner countered these claims, arguing that GSTN numbers were mentioned in the supplier certificates and that the tax authorities wrongly recorded the facts. The petitioner further emphasized that the government circular explicitly allowed the use of supplier certificates for ITC claims, making the rejection arbitrary and unlawful.

A single bench led by Justice Piyush Agrawal after examining the records, confirmed that the GSTN numbers were present in the certificates and concluded that the denial of ITC was based on an incorrect premise. The court held that the petitioner submitted the certificates in accordance with the Government Order, and ITC could not be denied on frivolous technical grounds.

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The court set aside the impugned orders and remanded the matter to the original authority for fresh adjudication. The court directed the tax department to consider all submitted materials and issue a reasoned and speaking order within three months. The court also clarified that any amount deposited by the petitioner would be subject to the final decision of the tax department. The writ petition was allowed.

To Read the full text of the Order CLICK HERE

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