Credit should not be denied when ITC not reflected in GSTR-3B is claimable based on GSTR-2A & GSTR-9

Introduction: In a recent landmark judgment by the Hon’ble Madras High Court, the contentious issue of denying Input Tax Credit (ITC) solely based on its absence in GSTR-3B returns was addressed. This analysis delves into the case of Sri Shamunga Hardwares Electricals v. State Tax Officer and its implications for GST compliance.

The Hon’ble Madras High Court in the case of Sri Shamunga Hardwares Electricals v. State Tax Officer [Writ Petition No. 3804 of 2024 dated February 20, 2024] allowed the writ petition, thereby holding that, Credit should not be denied when ITC claim is not reflected in Form GSTR-3B return in case where the Assessee filed nil return erroneously in Form GSTR-3B, but claimed ITC by relying upon Form GSTR-2A and Form GSTR-9.

Facts:

Sri Shanmunga Hardawares Electricals (“the Petitioner”) is engaged in the business of trade in electrical products and hardware. The Petitioner filed nil return erroneously in GSTR-3B. However, the Input Tax Credit (“ITC”) was duly reflected in GSTR-2A, based on which GSTR-9 (annual returns) were filed duly reflecting the ITC as claimed by the Petitioner.

However, the Revenue Department (“the Respondent”) rejected the ITC claim of the Petitioner solely on the ground that, the Petitioner has not claimed ITC in GSTR-3B returns vide Assessment Order dated September 30, 2023 (“the Impugned Order”).

Aggrieved by the Impugned Order, the Petitioner filed a writ petition before the Hon’ble High Court.

Issue:

Whether Credit should be denied when ITC claim is not reflected in Form GSTR-3B return?

Held:

The Hon’ble Madras High Court in the case of Writ Petition No. 3804 of 2024 held as under:

• Noted that, when the registered person contends that, he is eligible to claim ITC, by relying upon GSTR-2A and GSTR-9 returns, the Assessing Officer should examine whether the claim of ITC is valid by examining the required documents, further calling upon the registered person to provide the required documents.
• Opined that, the entire claim of ITC was rejected by the Respondent on the ground that, GSTR-3B did not reflect the ITC claim.
• Held that, the Impugned Orders are quashed and matter be remanded back for reconsideration.

Conclusion: The judgment handed down by the Hon’ble Madras High Court provides clarity on the issue of ITC claim denial when not reflected in GSTR-3B but substantiated by GSTR-2A and GSTR-9 filings. It underscores the need for a comprehensive assessment of ITC claims, considering all available documents, to ensure fair and equitable treatment for taxpayers.

This ruling sets a significant precedent, highlighting the importance of adherence to GST laws while also ensuring that legitimate claims are not unjustly denied. Taxpayers and tax authorities alike must heed this decision to foster a more transparent and compliant GST ecosystem.

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