Introduction
In a recent ruling, the Kerala High Court delivered a significant verdict regarding Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime. The court held that purchasers cannot be denied ITC solely based on discrepancies in the GSTR-2A Form, marking a crucial development in GST compliance and taxpayer rights. Kerala High Court held that GST – Input Tax Credit Cannot Be Denied to Purchaser Merely Because Seller Didn’t Record Transaction In GSTR-2A Form.
Facts of the Case
The case revolved around a petitioner who was aggrieved by the denial of a claim for ITC totaling Rs. 44,51,943.08 for Central GST (CGST) and State GST (SGST). The authorities limited the claim to an excess of Rs. 1,04,376.05 as CGST, with an equal amount of SGST credit being denied. This denial was based on the grounds that, according to the GSTR-2A Form related to invoice supply, the taxpayer would only be eligible for the input tax amount shown in GSTR-2A.
The petitioner’s counsel argued that denying input tax credit solely on the basis of the amount mentioned in GSTR-2A, which the petitioner had no control over, was unjust. It was contended that the Assessing Authority should independently evaluate the petitioner’s ITC claim, irrespective of the GSTR-2A amount.
The counsel relied on Section 16(2) of the GST Act, which stipulates that no registered person shall be entitled to the credit of any input tax unless certain conditions are fulfilled. It was asserted that the petitioner had fulfilled all these conditions, including the payment of tax to the seller-dealer, who had issued a valid tax invoice.
The petitioner contended that despite complying with all stipulated conditions, the assessing authority had reversed the availed credit and directed the petitioner to deposit the tax corresponding to the disallowed input tax credit.
The counsel also cited various precedents that supported the petitioner’s claim, emphasizing that ITC could not be denied if the taxpayer genuinely paid the tax to the seller-dealer, and no collusion was found between the parties.
Held by the Court
The Kerala High Court, in its ruling, held that Input Tax Credit (ITC) cannot be denied to a purchaser solely on the grounds of non-reflection of the transaction in the GSTR-2A Form. This decision underscores the principle that discrepancies in the GSTR-2A should not be used as the sole basis for rejecting legitimate ITC claims. It reinforces the importance of independently assessing ITC claims and ensuring that taxpayers are not unfairly penalized due to factors beyond their control.
This ruling has significant implications for GST compliance and taxpayer rights, providing clarity and protection for businesses seeking to claim input tax credits in accordance with the law. It sets a precedent that ITC should be granted based on the fulfillment of statutory conditions rather than discrepancies in forms or documents.
Diya Agencies Vs State Tax Officer (Kerala High Court); WP(C) No. 29769 of 2023; 12/09/2023
Author Bio
a very important ruiling. when a buyer has paid his share of cgst and sgst to buyer, he has fulfilled his duties or obligation..
it is govt duty to penalise the seller who failed to file his gstr 1 in time.
the hasty decision of GST implementation has such stupid flaws. off course govt will fight it tooth & nails to reduce its responsibility.