GST ITC Denial on GSTR-2A Mismatch: Telangana HC Allows Rectification Route

Vishist Business Solutions Private Limited Vs Appellate Joint Commissioner of State Tax (ST) (Telangana High Court)

Telangana HC Allows Rectification Route for ITC Mismatch Due to GSTR-2A Discrepancy – Relief to M/s. Vishist Business Solutions (AY 2018-19)

 Introduction

Input Tax Credit (ITC) mismatches between GSTR-2A and GSTR-3B have been one of the most litigated issues under GST, often arising due to supplier-side errors. Taxpayers frequently face demands despite having genuine transactions, simply because invoices were not timely reflected in returns.

In a pragmatic ruling dated 22.01.2026, the Telangana High Court provided relief to M/s. Vishist Business Solutions Pvt. Ltd., allowing it to seek rectification of the assessment order where ITC was denied due to mismatch. The judgment highlights that procedural lapses by suppliers should not unjustly burden recipients, especially when supporting evidence exists.

Case Background

The petitioner challenged:

• Order-in-Original dated 18.04.2024 passed under GST law
• Appellate Order dated 19.11.2025, affirming the demand

The dispute related to AY 2018-19, where:

• ITC was denied due to non-reconciliation between GSTR-3B and GSTR-2A
• Authorities relied on Section 16(2)(c) of the GST Act
• The petitioner failed to produce CA certificates / supplier confirmations as required under CBIC Circular dated 27.12.2022

However, later developments showed:

• Supplier had uploaded invoices belatedly in September 2019
• Tax liability was fully discharged by the supplier
• The invoices were eventually reflected in GSTR-2A

Key Legal Issue

Whether ITC can be denied due to mismatch in GSTR-2A when:

• Supplier has subsequently uploaded invoices and paid tax, and
• The taxpayer seeks to rely on post-facto documentary evidence

Arguments Presented

Petitioner’s Submissions:

• Supplier initially filed NIL returns, but later corrected the error
• Invoices were uploaded and tax was paid in September 2019
• Produced Chartered Accountant certificate dated 05.12.2025
• Argued that denial of ITC is unjust when tax has been paid to the Government
• Sought relief based on CBIC Circular dated 27.12.2022

Respondent’s Contentions:

• Suggested that the petitioner has an alternative remedy
• Advised to seek rectification under Section 161 of the GST Act
• Opposed direct interference under writ jurisdiction

Court’s Observations

The Bench comprising Aparesh Kumar Singh and G. M. Mohiuddin adopted a practical approach:

• The Court did not examine merits of ITC eligibility
• Noted availability of statutory remedy of rectification
• Recognized that relevant documents (CA certificate, supplier compliance) now exist
• Considered it appropriate to allow the petitioner to approach the proper authority

Final Judgment

The writ petition was disposed of with the following directions:

• Liberty Granted: Petitioner allowed to approach the proper officer
• Purpose: Filing of rectification application under Section 161
• Conditions:
  • Submission of supporting documents (CA certificate, invoices, returns)
• Direction to Authority:
  • To verify records
  • Decide the application in accordance with law

Author’s Analysis – Practical Takeaways for Taxpayers

1. ITC Cannot Be Denied Solely Due to Timing Mismatch

If the supplier eventually uploads invoices and pays tax, the recipient has a strong case—subject to proper documentation.

2. Importance of CBIC Circular (27.12.2022)

The circular provides a remedial framework for ITC mismatch cases—taxpayers must actively rely on it.

3. Rectification is a Powerful Remedy

Instead of directly approaching High Court, Section 161 rectification can correct errors based on new evidence.

4. Supplier Compliance Still Critical

Even genuine ITC claims can fail if supplier filings are incorrect or delayed—continuous vendor follow-up is essential.

5. Documentation is Key

CA certificates, supplier confirmations, and return filings play a decisive role in litigation outcomes.

Conclusion

The decision in M/s. Vishist Business Solutions Pvt. Ltd. reinforces a balanced approach in GST litigation. While courts may not directly intervene in technical matters, they ensure that taxpayers are not left remediless when genuine transactions are backed by evidence. By directing the petitioner to the rectification route, the Court preserved procedural discipline while enabling substantive justice.

For taxpayers, the takeaway is clear:

Track vendor compliance closely, maintain documentation, and use rectification provisions effectively to safeguard ITC claims.

FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT

Learned counsel Ms. Akruti Agarwal appears for the petitioner. Sri Swaroop Oorilla, learned Special Government Pleader for State Tax, appears for respondents No.1, 2 and 4.

Learned counsel Sri B.Mukherjee, representing Sri N.Bhujanga Rao, learned Deputy Solicitor General of India, appears for respondent No.3.

2. The tax liability for the period 2018-2019 was confirmed in the order-in-original dated 18.04.2024 (Annexure P.2) on the grounds of excess input tax credit claimed on account of non-reconciliation of information declared in GSTR-09 in teeth of Section 16(2)(c) of the Telangana Goods and Services Tax Act, 2017 (hereinafter referred to as, “the Act”), by respondent No.2. The same was affirmed in the appeal vide order dated 19.11.2025 (Annexure P.1), as the petitioner had failed to produce the certificates issued by the suppliers/Chartered Accountants as envisaged in the Central Board of Indirect Taxes and Customs (CBIC) circular dated 27.12.2022 bearing Circular No.183/15/2022-GST in the absence of invoices which are not reflecting in its Form GSTR-2A.

3. The Chartered Accountant’s certificate dated 05.12.2025 certified that respondent No.5 had filed the invoices dated 29.03.2019 and 31.03.2019 and discharged its liability for these invoices involving total tax amount of Rs.7,20,000/- and these two invoices were uploaded by the supplier in its Form GSTR-1 for the tax period September 2019 filed on 13.11.2019. The supplier has paid the entire tax in respect of these invoices through its FORM GSTR-3B for September, 2019 filed on 14.11.2019 and consequent to the above filing, these invoices are reflected in the recipient’s FORM GSTR-2A for September 2019. Earlier, respondent No.5 filed NIL returns for March 2019 in Form GSTR-3B filed on 31.07.2019 and Form GSTR-1 filed on 13.11.2019. However, since respondent No.5 rectified its mistake of not uploading the invoices pertaining to the petitioner in September, 2019 return in both GSTR-1 and GSTR-3B, the petitioner should not be made to suffer. It is submitted that if the certificate of the Chartered Accountant in terms of the circular dated 27.12.2022 which deals with the subject of dues in input tax credit availed in GSTR-3B as compared from Form GSTR-2A for the financial years 2017-2018 and 2018-2019 is taken into consideration, the petitioner would not be liable for payment of any tax. The petitioner has, therefore, approached this Court in the writ jurisdiction.

4. Learned Special Government Pleader for State Tax submits that for this omission, the petitioner can seek rectification of the impugned order-in-original before the proper officer under Section 161 of the Act.

5. Learned counsel for the petitioner, therefore, seeks liberty to the petitioner to approach the proper officer with the aforesaid prayer.

6. Having regard to the facts and circumstances noted above, the writ petition is disposed of without commenting on the merits of the case of the parties by allowing the petitioner to approach the proper officer with an application for rectification of the order-in-original supported with the necessary documents as above. Needless to say, the proper officer would consider such application in accordance with law after due verification of the records. There shall be no order as to costs.

Miscellaneous applications pending, if any, shall stand closed.