No Denial of ITC to Purchaser on Mere Non-Recording of Transaction In GSTR-2A Form: Kerala HC [Read Order]

In a significant ruling a Single Bench of the Kerala High Court observed that Input Tax Credit (ITC) cannot be denied to a purchaser merely on ground of non-recording of the transaction in the GSTR-2A Form.

The petitioner’s, Diya Agencies, claim for the input tax credit of Rs.44,51,943.08/- for the Central Goods and Service Tax (CGST) and State Goods and Service Tax (SGST) has been limited at excess claim of Rs.1,04,376.05/- as CGST and same amount as SGST credit has been denied on the ground that as per the GSTR 2A in respect of invoice supply, the tax payer is only eligible for input tax amount shown in CGSTR 2A.

The grievance of the petitioner is that despite having fulfilled all the conditions as per the conditions enumerated under Sub-section 2of Section 16 of the GST Act, the assessing authority has reversed the credit availed and directed the petitioner to deposit the tax to the extent of disallowance of input tax credit.

The Counsel for the petitioner contended that the claim of input tax credit cannot be denied merely on the ground of amount mentioned in the GSTR 2A for which the petitioner does not have any control. The Counsel for the petitioner further submitted that the assessing authority is required to independently examine the claim of input tax credit of the assessee irrespective of the amount mentioned in the GSTR 2A.

For a dealer to be eligible to avail credit of any input tax, the conditions prescribed in Section 16 (2) of the GST Act has to be fulfilled. Sub-section 2 of Section 16 commences with a non-obstinate clause stating that notwithstanding anything contained in Section 16 (1) no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless mentioned in the clause under Section 2A of the GST Act.

The Central Board of Indirect Tax and Customs had issued press release dated 18.10.2018 clarifying that furnishing of outward details in Form GSTR-1 by the corresponding supplier(s) and the facility to view the same in Form GSTR-2A by the recipient is in the nature of taxpayer facilitation and does not impact the ability of the tax payer to avail ITC on self-assessment basis in consonance with the provisions of Section 16 of the GST Act.

Further, it has been clarified that the apprehension that ITC can be availed only on the basis of reconciliation between Form GSTR-2B and Form GSTR-3B conducted before the due date for filing of the return in Form GSTR-3B for a particular month will be unfounded and the same exercise can be done thereafter also.

The Supreme Court in The State of Karnataka v. M/s. Ecom Gill Coffee Trading Private Limited has held while interpreting the Section 70 of the Karnataka Value Added Tax Act, 2003 that “Merely because the dealer claiming such ITC claims that he is a bonafide purchaser is not enough and sufficient. The burden of proving the correctness of ITC remains upon the dealer claiming such ITC. Such burden of proof cannot get shifted to the Revenue.”

The Court of Justice Dinesh Kumar Singh observed that “If on examination of the evidence submitted by the petitioner, the assessing officer is satisfied that the claim is bonafide and genuine, the petitioner should be given input tax credit. Merely on the ground that in Form GSTR-2A the said tax is not reflected should not be a sufficient ground to deny the assessee the claim of the input tax credit.” Advocates Aji V. Dev, H. Abdul Lathief, Alan Priyadarshi Dev, and S. Sajeevan appeared for the petitioner and Government Pleader Jasmine M.M, appeared for the respondents.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates