Rahul Kumar Dwivedi Vs Shyam Kripa Associates (GSTAT Agra)
Summary: The Goods and Services Tax Appellate Tribunal, Agra, dismissed the State Tax Department’s appeal against the first appellate order allowing Shyam Kripa Associates’ input tax credit claims. The taxpayer, a partnership firm constructing residential complexes, faced proceedings for FY 2019-20 alleging excess ITC based on differences between GSTR-3B and GSTR-2A and inadmissible credit on banking services received from Oriental Bank of Commerce. The adjudicating officer passed an ex parte order after the taxpayer failed to respond to the show cause notice, disallowing ITC and imposing interest of Rs. 18,04,427 and penalty of Rs. 2,09,084. The first appellate authority subsequently accepted that the disputed credit included unclaimed FY 2017-18 ITC taken in FY 2019-20 and that the banking services credit was admissible.
On the deferred credit issue, the Tribunal noted that the undisputed chart in the first appellate order showed ITC of Rs. 17,42,911.12 in GSTR-2A against Rs. 20,81,660 claimed in GSTR-3B, resulting in a difference of Rs. 3,38,748.88. It accepted the finding that the taxpayer had inadvertently omitted eligible FY 2017-18 credit and subsequently claimed it, with the deferred credit disclosed in its annual-return records. The Tribunal relied on section 16(5) of the CGST Act, which permits ITC relating to FYs 2017-18 to 2020-21 in returns under section 39 filed up to 30 November 2021, notwithstanding section 16(4). It also referred to A2Z Infra Engineering Ltd. v. Union of India concerning the retrospective relief.
The Tribunal further held that the mismatch required reconciliation and did not, on the established facts, extinguish the taxpayer’s entitlement. It recorded that verifiable books of account, tax invoices and payment evidence supported the genuineness of the credit. It referred to Circular No. 183/15/2022-GST and Circular No. 193/05/2023-GST addressing historical ITC mismatches and verification requirements. Accordingly, it upheld the first appellate authority’s acceptance of the deferred credit.
On banking services, the Tribunal agreed that section 17(5) did not bar the disputed credit merely because it related to banking services used in furtherance of business. The Department failed to establish that the services fell within any blocked-credit category applicable to the case. Both questions were therefore answered against the Department, and the first appellate order dated 13 June 2025 was upheld. The taxpayer’s document styled as cross-objections was treated as its reply or written submissions because it challenged no finding of the first appellate authority.
Cases Discussed
- A2Z Infra Engineering Ltd. v. Union of India — 466/109 GST 769/98 GSTL 35; W.P. (Civil) No. 25/2024 (Sikkim High Court). The Tribunal referred to this decision for the benefit of section 16(5) in relation to deferred ITC and the return-filing cut-off of 30 November 2021. The reporter citation is reproduced as supplied.
FULL TEXT OF THE JUDGMENT/ORDER OF GSTAT
1. Being aggrieved by the order dated- 13.06.2025, passed by first appellate authority in first appeal no. AD091124901102572H/2024, Sh. Rahul Kumar, Dy. Commissioner, state tax has preferred this second appeal on behalf of state tax department u/s 112 of Central Goods and Services Tax, Act/ Uttar Pradesh Goods and Services Tax, Act, 2017, (for short CGST/UPGST, Act). Vide order under appeal, first appeal filed by the taxpayer/respondent herein has been allowed and by setting aside Order-in-Original, demand of tax, penalty and interest has been quashed. For convenience hereinafter in the order appellant and respondent will be addressed as department and taxpayer, respectively.
2. It is admitted or not in dispute that taxpayer is a partnership firm engaged in the business of construction of residential complexes having GSTIN 09ACPFS0362Q1ZB. Department has alleged that in the year 2019-20 taxpayer firm had claimed excess input tax credit of CGST Rs. 10,40,830/- and of SGST Rs. 10,40,830/- as shown such difference in his GSTR-3B and available in GSTR-2A. It was also alleged that taxpayer firm has wrongly availed Input tax credit of Rs. 4592.45/- as CGST and 4592.45/- as SGST which is not permissible as per provision contained in section 17(5) of CGST/UPGST as services received by taxpayer from Oriental Bank of Commerce. On the above learned departmental authorized officer issued SCN to taxpayer firm u/s 73 of CGST/SGST, Act, in which Rs. 10,40,830/- as CGST and Rs. 10,40,830/- as SGST was asked to be deposited as reversal of ITC availed. As per record, SCN was not responded by taxpayer firm despite multiple opportunities given by proper officer. Learned proper officer has passed the Order-in-Original ex-parte against taxpayer by holding that taxpayer firm has claimed input tax credit of Rs. 20,81,660/- in GSTR-3B in excess from ITC available in GSTR 2A. Additionally ITC claimed of Rs. 9184.92/- pertaining to banking services was also cancelled in view of section 17(5) of CGST/SGST, Act. Apart from that Rs. 18,04,427/- were also imposed as interest on tax amount along with penalty of Rs. 2,09,084/-
3. Being aggrieved by the Order-in-Original passed by proper officer taxpayer firm has preferred first appeal u/s 107 of CGST/UPGST, Act before additional commissioner Gr.II, appeal (second) state tax, Agra. Learned first appellate authority by conducting further enquiry in the matter allowed the first appeal by holding that taxpayer firm did not claim its due input tax credit for the financial year 2017-18 and such deferred ITC was claimed in the year 2019-20 which is permissible to him as per provisions. It has further held that ITC on banking services which was disallowed by the proper officer is also permissible under law. In such a way first appeal has been allowed in favor of taxpayer firm and Order-in-Original and accordingly demand raised was quashed, hence this second appeal by the department.
4. Learned authorized representative for respondent has also submitted a memorandum of cross objection on its title and face but in such memorandum of cross objection no finding of first appellate authority has been assailed. Therefore, same is being treated as reply to the memorandum of second appeal or written submissions made by taxpayer’s authorized representatives.
5. We have heard the arguments of both the authorized representatives and perused the record available in GSTAT portal. In order to decide the second appeal, the point for determination may be formulated as under-
(i) Whether a taxpayer is entitled to claim deferred ITC for FY 2017-18 in the GSTR-3B in later FY 2019-20?
Whether first appellate authority has rightly allowed the ITC of 9184.90 on banking services availed by taxpayer?
FINDINGS WITH REASON
6. As per chart given in the impugned order itself which is not disputed by the authorized representative of department, in the relevant year 2019-20 in GSTR-2A of taxpayer ITC of Rs. 17,42,911.12/- was available but taxpayer firm had claimed ITC in GSTR-3B of Rs. 20,81,660/- in this way ITC of Rs. 3,38,748.88/- is shown to be claimed as excess one. Learned first appellate authority has also recorded on the basis of materials available on record that taxpayer claimed previous years deferred ITC in the relevant FY which was declared in GSTR 09 of the year 2017-18 and the remaining ITC for the year 2017-18 was claimed in upcoming FY under column 8C of GSTR 09. It was a bona fide mistake that the taxpayer skipped to claim the ITC in the same year in which bill was raised to him and on realizing the mistake taxpayer claimed the remaining ITC for 2017-18 later in the year 2019-20 in GSTR 03B return.
7. So far, legality of claiming the ITC belatedly in the year 2019-20 for the year 2017-18 is concerned, learned counsel for taxpayer has drawn our attention to section 16(5) of CGST, Act which provides that notwithstanding anything contained in sub section (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the FY 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take ITC in any return u/s 39 which is filed up to the 30?? day of November 2021. The above amendment was introduced by circular no. 237/31/2024-GST and applied retrospectively.
8. In para no. 05 of impugned order in an another chart pertaining to deferred ITC for 2017-18 has also been given, which has not also been disputed by the department.
9. In respect of point under consideration before us, in case of A2Z Infra Engineering Ltd. v. Union of India 466/109 GST 769/98 GSTL 35 (SIKKIM)/WP Civil No. 25/2024 Sikkim High court has held that in view of inserted section 16(5) in CGST Act by Finance Act, 2024, a taxpayer is entitled for deferred ITC for years 2017-18, 2018-19 and 2019-20 till 30?? November 2021.
10. Apart form above, it has been settled by the judicial pronouncements that mismatch in form GSTR 2A and GSTR 3B is a mere discrepancy which forms a reconciliation issue not issuing order of reversal of ITC directly because of GSTR 2A is an informational dynamic reporting tool whereas GSTR 3B is a self assessed return. In the present case and as held by first appellate authority the tax payer firm has succeeded in providing verifiable books of accounts, tax invoices, proof of payment for the proving the genuine nature of the ITC claimed by him. Further, CBIC circular no. 183/15/2022 GST explicitly addresses mismatches between GSTR 2A and GSTR 3B for FY 2017-18 and 2018-19 extended to FY 2019-20 vide circular no. 193/05/2023-GST. It clarifies that if tax was actually remitted to the exchequer and genuine supply occurred, ITC cannot be denied solely due to non-reflection in GSTR 2A subject to verification from suppliers.
11. In view of the discussion made so far we are of the considered view that learned first appellate authority has rightly recognized the ITC claimed by taxpayer for the year 2017-18 later in the year 2019-20 and thus, mismatch between GSTR 2A and GSTR 3B shall not extinguish the right of taxpayer to get such ITC. Accordingly, question no. 1 formulated above is answered against department.
12. Now we come to the second point of consideration. In this regard taxpayer had claimed ITC of Rs. 9,184.90/- for the relevant year 2019-20 as he availed banking service from Oriental Bank of Commerce, which was disallowed by the proper officer by taking note of provision contained in section 17(5) of CGST/UPGST, Act.
13. Learned first appellate authority has held that there is no impediment in section 17(5) of CGST/UPGST, Act which bars a taxpayer to claim ITC for receiving banking services in furtherance of his business. After going through the provisions contained in section 17(5) of CGST/UPGST, Act, we are also in agreement with the findings recorded above by the first appellate authority as department has not succeeded to show that categories of goods and services mention u/s 17(5) in which respect ITC is not allowable to a business entity are existing in the case in hand. Therefore, answer to the second question of determination also goes against the department.
14. Consequently, as both the questions formulated in para no. 05 have been answered against department/appellant, this second appeal fails and accordingly dismissed by upholding the Order in appeal dated- 13.06.2025 passed by first appellate authority.
15. There is no pending interim application in the appeal.
16. Order is pronounced in open court on this day of 16th of October, 2026.
17. Copy of order be communicated to all concerned, as per rules.
