Arjuna (Fictional Character): Krishna, as Christmas approaches, bringing gifts of joy and celebration, the world of taxation too seems to be unwrapping its own surprises. Recently, the Madras High Court’s judgment in case of Kavin HP GAS Gramin Vitrak VS Commissioner of Commercial Taxes Chennai & Deputy State Tax Officer Madhurai, on disallowance of Input Tax Credit under section 16(4) has caught the taxpayers’ attention. Could you shed light on this significant decision?

Krishna (Fictional Character): Certainly, Arjuna. Just like Santa brings unexpected gifts, the world of GST also has its own surprises. The Madras High Court’s decision, like a well-timed Christmas present, offers clarity and relief. The Court directed the GST authorities to allow manual return filings for claiming ITC against outward supplies without tax payments. Further the respondents (counter party)in this case are directed to accept the belated returns and also, if the returns are otherwise in order and accordance to law, the claim of ITC may be allowed. Hence, the matter is remitted back to the authorities for reconsideration of the same.

Arjuna (Fictional Character): Krishna, what were the facts of the case that led to such a judgment?

Krishna (Fictional Character): Arjuna, the case involved a taxpayer who, due to financial constraints, filed the GSTR-3B belatedly and availed ITC. The taxpayer argued that since GSTR-2, the designated form for claiming ITC, was not notified, they couldn’t adhere to the prescribed time frame. As per Section 38 of the GST Act read with Rule 60, the ITC shall be claimed through GSTR-2, but GST portal had not provided the facility of GSTR-2 till now.

The taxpayer contented that it is due to technical reasons and the mistakes which are to be rectified by the GST Council, unfortunately the GST Council had not taken up the issue to rectify the same.

Further he says that the respondent (counter party) in the affidavit submitted state that any Form can be filed only electronically, that too it has to be filed on or before 20th of every month. So, as the said GSTR-2 Form is not available, then electronic filing is not possible, then taxpayer cannot be expected to file the Form electronically.

The taxpayer also contented that if the GST Portal has provided option for filing return without payment of tax or incomplete GSTR-3B, the dealer would be eligible for claiming of input tax credit and would have claimed the same. The same was not provided in GST Portal hence, the dealers are restricted to claim ITC on the ground of non-filing of GSTR-3B within prescribed time.

The Court empathized with the taxpayer’s predicament, acknowledging the systemic gaps in the GST Portal and hence, the impugned orders are quashed.

Arjuna (Fictional Character): Krishna, that’s great now what should taxpayers learn from this judgment?

Krishna (Fictional Character): Arjuna, just as children learn the virtues of patience and hope during Christmas, taxpayers too should glean insights from this judgment. It underscores the importance of compliance, timely filings, and staying abreast of legal provisions. However, it also brings to light the empathy within the judicial system, akin to Santa Claus, who understands and acknowledges genuine hardships. Taxpayers should maintain diligence, but also remember that correct interpretation of the law can offer relief and fairness.

Author Bio

Qualification: CA in Practice
Company: R.B. Sharma and Co
Location: Aurangabad, Maharashtra, India
Member Since: 27 Jan 2018 | Total Posts: 432
1. Central Council Member of ICAI. 2. Vice-Chairman of WIRC of ICAI for the period 2015-2021. 3. Youngest Chairman of Aurangabad Branch of WIRC of ICAI in 2002. 4. Author of Popular Tax articles series based on Krishna and Arjuna conversation i.e “KARNEETI” published in Lokmat on every View Full Profile

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