Karibasappa Durgappa Hadagali Vs Additional Commissioner (Karnataka High Court)
The Karnataka High Court partly allowed a writ petition challenging adjudication and appellate orders that had denied input tax credit (ITC) due to mismatch between GSTR-3B and GSTR-2A. The petitioner sought quashing of the adjudication order dated 07.12.2023 and the order-in-appeal dated 29.03.2025, contending that the issue was already covered by an earlier judgment of a Co-ordinate Bench of the same Court.
The petitioner relied on the Co-ordinate Bench decision rendered on 06.01.2023, which had interpreted Circular No. 183/15/2022-GST dated 27.12.2022 issued by the Central Board of Indirect Taxes and Customs. That Circular clarified how discrepancies between ITC claimed in GSTR-3B and ITC reflected in GSTR-2A for FY 2017-18 and 2018-19 should be dealt with, especially where mismatches arose due to suppliers’ errors in filing GSTR-1, including non-filing, partial reporting, wrong GSTIN, or incorrect classification of supplies.
The Circular recognized that during the initial years of GST implementation, GSTR-2A was not readily available on the portal and that restrictions under Rule 36(4) were introduced only from October 2019. It prescribed a verification mechanism requiring tax authorities to examine whether the statutory conditions under Section 16 of the CGST Act were satisfied, including possession of invoices, receipt of goods or services, and payment to suppliers. For verifying tax payment by suppliers, the Circular required production of CA/CMA certificates or supplier confirmations, depending on the quantum of mismatch. The Circular applied to ongoing scrutiny, audit, investigation, adjudication, or appeal proceedings for FY 2017-18 and 2018-19.
