ITC cannot be denied merely for non-reflection of transaction in GSTR 2A

St. Joseph Tea Company Ltd. Vs State Tax Officer (Kerala High Court)

The recipients of the petitioner under its provisional registration (ID) for the period from 01.07.20217 to 09.07.2018 shall not be denied ITC only on the ground that the transaction is not reflected in GSTR 2A. It will be open for the GST functionaries to verify the genuineness of the tax remitted and credit taken. Ordered accordingly.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

The petitioner, a registered dealer under the Kerala Value Added Tax Act, had migrated to the Goods and Services Tax Act regime and applied for registration under the GST statutes. Having failed to obtain registration due to technical glitches in the GST portal, the petitioner filed WP(C) No.768 of 2018. An interim order was passed in that writ petition permitting the petitioner to apply for registration afresh. Accordingly, the petitioner applied and was granted fresh registration with effect from 09.03.2018. Even though the issue of registration was thus solved, the petitioner’s grievance about the inability to comply with the requirements in terms of the statutes for the period from 01.07.2017 to 09.03.2018, subsisted. On behalf of the respondents, it was submitted that appropriate decision will be taken for enabling the petitioner to comply with the statutory requirements for the aforementioned period. Accordingly, W.P. (C) No.768 of 2018 was disposed vide Ext.P1 judgment, directing respondents 1 and 2 to make appropriate changes in the portal so as to enable the petitioner to comply with the statutory requirements for the period prior to 09.03.2018 also.

2. As per the averments in the instant writ petition, despite the direction in Ext.P1, no change, enabling the petitioner to comply with the statutory requirements, was brought about by the respondents. As a result, the petitioner was unable to upload the returns for the period from 01.07.2017 to 09.03.2018 and to remit tax. This disabled the petitioner’s customers from claiming Input Tax Credit (ITC) and many of them stopped during business with the petitioner. Faced with such a situation, the petitioner sold its products to various purchasers including a concern by name ‘Paramount Environ Energies’. The purchasers paid the value of the goods including GST to the petitioner and claimed ITC. While so, the petitioner was served with Ext.P3 notice requiring it to complete migration to the GST regime. The Department also started issuing notices in Form GST Asmt-10 to the petitioner’s customers, citing discrepancy in the return. Hence, the petitioner filed Ext.P4 representation before the first respondent, requesting to make arrangements to rectify the technical issues and to provide opportunity for filing monthly returns for the period prior to 09.03.2018. The writ petition is filed aggrieved by the non-consideration of Ext.P4.

3. Heard Smt.Nisha John, learned Counsel for the petitioner and Sri. P. R. Sreejith, Senior Standing Counsel.

4. Learned Counsel for the petitioner reiterated the averments in the writ petition and contended that, petitioner having obtained fresh registration on 09.03.2018 in terms of the interim direction of this Court, the respondents are bound to facilitate compliance with the statutory requirements for the period prior to 09.03.2018 also. According to the learned Counsel, nothing was done by the respondents to comply with the direction in Ext.P1 judgment, in spite of repeated requests and hence, the initiation of proceedings against the petitioner’s customers and refusal of ITC, is illegal.

5. Learned Standing Counsel refuted the contention of no attempt having been made by the respondents to comply with the direction in Ext.P1 and submitted that keeping the petitioner’s interest in mind, the petitioner was contacted telephonically and through email and requested to provide its new GSTIN. Since the requisite details were not provided, the process directed vide Ext.P1 could not be carried out. It is submitted that the last date for migration was 28th February, 2019 and the petitioner having failed to respond to the communications issued, nothing further can be done in the matter.

6. I find merit in the submission that the fresh registration on 09.03.2018 having been obtained by the petitioner in terms of the interim order issued in W.P. (C) No.768 of 2018, an opportunity for statutory compliance for the period prior to 09.03.20218 ought to be provided. At the same time, there is substance in the submission made on behalf of the respondents that it is technically impossible to make changes in the GST portal for providing opportunity for an individual assessee to comply with the statutory requirements from a date prior to its registration.

7. In the circumstances, the only possible manner in which the issue can be resolved is for the petitioner to pay tax for the period covered by provisional registration from 01.07.2017 to 09.03.2018 along with applicable interest under Form GST DRC-03 dealing with intimation of payment made voluntarily or made against the show cause notice (SCN) or statement. If such payment is effected, the recipients of the petitioner under its provisional registration (ID) for the period from 01.07.20217 to 09.07.2018 shall not be denied ITC only on the ground that the transaction is not reflected in GSTR 2A. It will be open for the GST functionaries to verify the genuineness of the tax remitted and credit taken. Ordered accordingly.

W.P. (C) No.11423 of 2021

This writ petition is filed by one of the concerns that had purchased goods from the petitioner in W.P.(C) No.17235 of 2020. The grievance is regarding issuance of Ext.P2 intimation in Form GST DRC-01A, despite payment of tax in full for the purchases effected. In view of the directions in W.P. (C) No.17235 of 2020, nothing survives for consideration herein. Accordingly, this writ petition is closed.