Supreme Court upholds Calcutta HC Verdict granting GST ITC in-spite of GSTR 2A - 3B Mismatch to Purchaser except in Exceptional Cases [Read Judgement]
The Supreme Court, in a major relief to purchasers and dealers, held that Input Tax Credit is not to be denied to Purchaser for fault of Seller except in Exceptional Circumstances.
![Supreme Court upholds Calcutta HC Verdict granting GST ITC in-spite of GSTR 2A - 3B Mismatch to Purchaser except in Exceptional Cases [Read Judgement]](https://www.taxscan.in/wp-content/uploads/2023/12/Supreme-Court-SC-Calcutta-HC-input-tax-credit-Mismatch-to-Purchaser-gst-itc-gstr-TAXSCAN.jpg "Supreme Court upholds Calcutta HC Verdict granting GST ITC in-spite of GSTR 2A - 3B Mismatch to Purchaser except in Exceptional Cases [Read Judgement]")
A Two-Judge Bench of the Supreme Court has upheld the Calcutta High Court judgment, rejecting the department’s appeal against the Calcutta High Court decision in Suncraft Energy Private Limited Case, which had held that Input Tax Credit (ITC) of the purchasing dealer cannot be denied by the department solely based on the supplying dealer's non-remittance of tax. Read More: Buyer...
A Two-Judge Bench of the Supreme Court has upheld the Calcutta High Court judgment, rejecting the department’s appeal against the Calcutta High Court decision in Suncraft Energy Private Limited Case, which had held that Input Tax Credit (ITC) of the purchasing dealer cannot be denied by the department solely based on the supplying dealer's non-remittance of tax.
The High Court of Calcutta has held that the Buyers who comply with the conditions contemplated under Section 16(2) of the Central Goods and Services Tax (CGST) Act and State Goods and Services Tax (SGST) Act, 2017 are eligible to avail Input Tax Credit (ITC) and are not liable for the mismatch or discrepancies in the Goods and Services Tax Return (GSTR) 2A and GSTR 3B due to the default of the seller.
It was also held that the recovery procedures initiated by the proper officer shall be directed against the seller and not the buyer.
The case, involving Suncraft Energy Private Limited, challenged the reversal of ITC under the West Bengal Goods and Services Tax (WBGST) Act. The appellant, represented by Ankit Kanodia, Megha Agarwal, and Jitesh Sah, argued for fulfilling all Section 16(2) conditions. The court highlighted the CBIC's press releases, affirming that GSTR 2A aids taxpayer facilitation without affecting ITC availability. It underscored no automatic ITC reversal from the buyer on the seller's non-payment, with seller recovery being the primary recourse.
Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya found fault in the reversal of ITC without action against the defaulting seller. The court directed the tax officer to prioritize action against the seller, allowing proceedings against the buyer only under exceptional circumstances per CBIC guidance.
This landmark judgment brings relief to compliant buyers, shielding them from seller defaults. The court stressed the importance of thorough inquiries against defaulting sellers before demanding ITC reversals from buyers.
The Bench of Supreme Court Justices B V Nagarathna and Justice Ujjal Bhuyan rightly upheld the right of the buyers, who shall not be prejudiced and punished for the mistake of sellers.
In short, the Supreme Court dismissal of the department’s appeal against the Calcutta High Court order brings relief to honest and compliant taxpayers, and no Input Tax Credit can be reversed from buyer for non-payment of tax by seller, quoting the inconsistency in GSTR-2A and GSTR-3B.
To Read the full text of the Order CLICK HERE
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