ITC Cannot Be Denied for GSTR-2A Mismatch as Imports & SEZ Supplies Were Not Reflected

By CA Sandeep Kanoi Goods and Services Tax Judiciary June 21, 2026 1 comment

TaxGuru Citation: 2026 taxguru.in 7298
Case Name: Biocon Limited Vs State of Karnataka (Karnataka High Court)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: All High Courts, Karnataka High Court

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Biocon Limited Vs State of Karnataka (Karnataka High Court)

The petitioner challenged an Order-in-Original dated 22.02.2024 passed under Section 73(9) of the CGST/KGST Act, 2017, whereby the tax authorities confirmed various GST demands arising out of the audit for FY 2018-19. The proceedings originated from audit observations, followed by a pre-intimation in Form GST DRC-01A, a Show Cause Notice (SCN) under Section 73(1), replies submitted by the petitioner, personal hearing, and written submissions. The impugned order ultimately confirmed tax of ₹30.37 crore along with interest of ₹29.14 crore and penalty of ₹3.03 crore. Aggrieved by the order, the petitioner approached the Karnataka High Court.

The principal challenge before the High Court concerned the denial of Input Tax Credit (ITC) of ₹20,00,82,381 on the ground that the ITC claimed in GSTR-3B exceeded the ITC reflected in GSTR-2A. The audit alleged that, for the period April 2018 to March 2019, several invoices were not reflected in GSTR-2A, resulting in excess availment of ITC in violation of Section 16(2) of the CGST/KGST Act. Based on this mismatch, the department demanded reversal of ITC together with interest and penalty.

The petitioner contended that the alleged mismatch arose only due to reporting errors and the design of the GST system. It explained that ITC relating to import of goods and procurements from SEZ units had been reported under “All Other ITC” in Table 4(A)(5) of GSTR-3B instead of Table 4(A)(1), which is meant for imports. According to the petitioner, after excluding ITC relating to imports and SEZ procurements, there was no excess ITC claim. The petitioner also pointed out that the reporting error had been corrected in the annual return (GSTR-9) by disclosing the ITC under Table 6E. Additionally, the same issue had earlier been examined by the jurisdictional officer through ASMT-10 proceedings, to which the petitioner had furnished a detailed reconciliation.