GSTR-3B and 2A Mismatch: Karnataka High Court Orders Fresh Adjudication for Ignoring Mandatory GST Circular
The Karnataka High Court in M/s. Abhimaani Structures and Engineering Private Limited v. The Superintendent of Central Tax (AWD-2), Bengaluru & Anr. set aside orders directing reversal of Input Tax Credit (ITC) for FY 2017-18 based solely on discrepancies between ITC claimed in GSTR-3B and reflected in GSTR-2A, holding that authorities must mandatorily follow Circular No. 183/15/2022-GST dated December 27, 2022. The petitioner had replied to a show cause notice, but the adjudicating authority passed orders under Section 73(9) of the CGST Act without considering the prescribed procedure under the Circular. The Court observed that the Circular, issued under Section 168(1), applies to pending adjudications for FY 2017-18 and 2018-19 and must be followed irrespective of whether the taxpayer specifically relies upon it. Referring to its earlier ruling in a similar matter, the Court held that mechanical disallowance of ITC solely on mismatch grounds is unsustainable. The matter was remitted for fresh consideration in accordance with law, granting liberty to the petitioner to file additional pleadings and documents.
Facts:
M/s. Abhimaani Structures and Engineering Private Limited (“the Petitioner”) replied to show cause notice (SCN) dated January 18, 2023 issued by the Superintendent of Central Tax (AWD-2), Bengaluru (“the Respondents”) noticing discrepancies between ITC claimed in GSTR-3B and reflected in GSTR-2A for FY 2017-18, and impugned order dated November 15, 2023 DRC-07 summary dated November 17, 2023 and SOR letter dated October 14, 2025 directed excess ITC reversal solely on discrepancy ground.
The Petitioner contended impugned order passed post reply to SCN without considering applicable Circular No. 183/15/2022-GST dated December 27, 2022 and non-following prescribed procedure for GSTR-3B/2A discrepancy caused prejudice warrants the demand to be set aside.
Aggrieved by impugned orders the Petitioner approached the Court invoking writ jurisdiction.
Issue:
Whether impugned order directing ITC reversal for FY 2017-18 GSTR-3B vs GSTR-2A mismatch without following Circular No. 183/15/2022-GST dated December 27, 2022 (impugned circular) prescribed procedure sustainable or prejudicial requiring remand for fresh consideration?
Held:
The Hon’ble Karnataka High Court in W.P. No. 35021 of 2025 (T-RES) held as under:
- Observed that, for the SCN dated January 18, 2023, the Petitioner submitted reply and the impugned order had been passed without considering the procedure in the Circular dated December 27, 2022 as applicable.
- Observed that, in R.S. Marketing and Logistics (P) Ltd., v. Commercial Tax Officer, (2024) 164 taxmann.com 9 (Karnataka) with regard to discrepancies in GSTR-3B ITC claimed and GSTR-2A reflected, the respective GST authority had disallowed solely on discrepancy, and this court had set aside and remanded notwithstanding opportunity availed.
- Held the Writ in the Petitioner’s favour by remitting the matter to the Respondent for reconsideration afresh in accordance with law bearing the impugned Circular in mind and the liberty submit additional pleadings/documents etc. considered proceeded further per law.
Our comments:
The Karnataka High Court in R.S. Marketing and Logistics (P) Ltd. v. Commercial Tax Officer [(2024) 164 taxmann.com 9] held adjudication order disallowing ITC excess over GSTR-3B vs 2A mismatch set aside as Authority mechanically rejected on discrepancy alone. It held that it is clear as per Paragraph No. 6 of the Circular that the procedure to be followed is as regards all matters pending for adjudication as regards the financial year 2017-18 and 2018-19. If that were to be so, the adjudicating authority ought to have taken note of the Circular irrespective of whether the petitioner had raised such contention.
Relevant Provision:
Circular No. 183/15/2022-GST dated December 27, 2022
“Subject: Clarification to deal with difference in Input Tax Credit (ITC) availed in FORM GSTR-3B as compared to that detailed in FORM GSTR-2A for FY 2017-18 and 2018-19 – reg.
….
3. In order to ensure uniformity in the implementation of the provisions of the law across the field formations, the Board, in exercise of its powers conferred under section 168(1) of the CGST Act, hereby clarifies as follows:
b. Where the supplier has filed FORM GSTR-1 as well as return in FORM GSTR-3B for a tax period, but he has declared the supply with wrong GSTIN of the recipient in FORM GSTR-1.
In such cases, the difference in ITC claimed by the registered person in his return in FORM GSTR-3B and that available in FORM GSTR-2A may be handled by following the procedure provided in para 4 below. 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.
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