Case Law Details
Shree Krishna Traders Vs State of U.P. and Another (Allahabad High Court)
Allahabad HC in Shree Krishna Traders vs. State of UP sets aside order on ITC dispute, remits to Revenue Department. Clarifies on GSTIN error in GSTR-1.
The Hon’ble Allahabad High Court in the case of M/s. Shree Krishna Traders v. State of UP and Another [Writ Tax No. 1106 of 2023 dated September 25, 2023] disposed of the writ petition, by setting aside the Impugned Order and remitting the matter back to the Revenue Department for adjudication, thereby directing the Revenue Department to pass the fresh orders by taking into consideration the circular, in the case where the ITC was disallowed due to difference in Form GSTR-3B and Form GSTR-2A caused because of entering wrong GSTIN number of the recipient in Form GSTR-1.
Facts:
M/s. Shree Krishna Traders (“the Petitioner”) has filed the writ petition challenging the proceedings initiated under Section 74 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”), by issuance of Notice dated December 24, 2022, by the Revenue Department (“the Respondent”) for the FY 2017-2018 for the tax period of July 2017 to March 2018. The Petitioner has also prayed for the quashing of the Order dated July 26, 2023 (“the Impugned Order”) passed under section 74 of the UP GST/CGST Act for the FY 2017-2018.
The Counsel for the Petitioner contended that, as per Circular No. 183/15/2022-GST dated December 27, 2022 (“the Circular”), in cases where the supplier has filed Form GSTR-1 as well as return in Form of GSTR-3B for the tax period, but has declared the supply with the wrong GSTIN of the recipient in the Form GSTR-1, the procedure provided under Para 4 of the circular is to be complied with when there is a difference in ITC claimed by the registered person in his return form in GSTR-3B and ITC available in GSTR-2A. The Petitioner also submitted that, the proper officer of the actual recipient shall intimate the concerned jurisdictional tax authority of the registered person, whose GSTIN has been mentioned wrongly, that ITC on those transactions is required to be disallowed if claimed by the recipient in the Form GSTR-3B. However, the allowance of ITC to the actual recipient does not depend on the completion of the action by the tax authority of such registered person, and such action should be pursued as independent action.
The Petitioner further submits that, the Respondent was required to follow certain procedures as laid down in para 4 of the Circular. The Petitioner also submits that, as per Impugned Order, the Petitioner has not been granted the benefit under the Circular. Therefore, the Petitioner prays for setting aside of Impugned Order and remitting the matter back to the Respondent for afresh decision.
Issue:
Whether ITC should be disallowed because of entering the wrong GSTIN number of the recipient in Form GSTR-1?
Held:
The Hon’ble Allahabad High Court in the case of Writ Tax No. 1106 of 2023 held as under:
- Noted that, the Respondent accepts the submission made by the Respondent, and submitted that the matter may be remitted back to the concerned authority for a fresh decision.
- Held that, the Impugned Order is set aside, and matter be remitted back to the Respondent. Hence, the writ petition is disposed of.
- Directed that, the Respondent shall pass fresh orders within a period of one month from today, taking into consideration the Circular and other material relied upon by the Petitioner supporting the case.
Conclusion: The Allahabad High Court’s intervention in the Shree Krishna Traders case provides clarity on the issue of ITC disallowance due to the wrong GSTIN in Form GSTR-1. The court’s decision to set aside the Impugned Order and remit the matter for a fresh decision underscores the importance of adhering to procedural guidelines outlined in relevant circulars. This ruling serves as a precedent for cases involving similar discrepancies, emphasizing the need for a fair and meticulous assessment of ITC claims in GST filings. Businesses should stay informed about such judicial interventions to navigate the complexities of GST regulations effectively.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Sri Aditya Pandey, learned counsel for the petitioner and Sri Ankur Agarwal, learned counsel appearing for the respondent Revenue.
2. Challenge in this writ petition is to the proceedings initiated under Section 74 of the U.P. GST/CGST Act by respondent no.2 consequent to the notice dated 24.12.2022 for the financial year 2017-18 co-responding to tax period July, 2017 to March, 2018. Further prayer for quashing of the impugned order dated 26.7.2023 passed under Section 74 of the U.P. GST/CGST Act for the financial year 2017-18 has been sought.
3. Learned counsel for the petitioner has invited attention of this Court to a circular dated 2.1.2023 with regard to the input tax availed in the form of GSTR-3B and has placed reliance on paragraph 3(d) to demonstrate that where the supplier has filed Form GSTR-1 as well as return in the Form of GSTR-3B for the tax period, but he has declared the supply with wrong GSTIN of the recipient in the Form of GSTR-1. In such cases, the difference in ITC claimed by the registered person in his return in Form of GSTR-3B and that available in Form GSTR-2A may be handled by following the procedure provided in para 4 of the circular. In addition, the proper officer of the actual recipient shall intimate the concerned jurisdictional tax authority of the registered person, whose GSTIN has been mentioned wrongly, that ITC on those transactions is required to be disallowed, if claimed by such recipients in their Form GSTR-3B. However, allowance of ITC to the actual recipient shall not depend on the completion of the action by the tax authority of such registered person, whose GSTIN has been mentioned wrongly, and such action will be pursued as an independent action.
4. Learned counsel for the petitioner further submits that the authority was required to follow certain procedure as laid down in paragraph 4 of the circular. He further submits that the impugned order though mentions the aforesaid circular, but the benefit under the said circular has not been extended to the petitioner. He submits that the impugned order may be set aside and the matter may be remitted to the authority concerned for decision afresh.
5. Sri Ankur Agarwal has no objection to the aforesaid proposition and submits that the matter may be remitted to the authority concerned for decision afresh.
6. In view of the fair statement made by Sri Ankur Agarwal, the impugned order dated 26.7.2023 is, hereby, set aside. The matter is remitted back to respondent no.2 to pass fresh orders within a period of one month from today, taking into consideration the circular as well as any other material relied upon by the petitioner in support of its case.
7. With the aforesaid observation, the writ petition is disposed of.
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