Case Law Details
Geetha Agencies Vs Deputy Commissioner of State Tax (Kerala High Court)
A recent judgment by the Kerala High Court in the case of Geetha Agencies vs. Deputy Commissioner of State Tax has significant implications for taxpayers and businesses. The court’s decision revolves around the denial of Input Tax Credit (ITC) due to discrepancies between GSTR 2A and GSTR 3B.
Detailed Analysis:
1. Grounds for Denial: The primary issue in this case is the denial of the petitioner’s input tax credit for an amount totaling Rs. 1,10,769 (SGST + CGST). The reason cited for this denial is a mismatch between the data in GSTR 2A and GSTR 3B.
2. Petitioner’s Response: The petitioner, Geetha Agencies, responded to the show-cause notice by stating that they had claimed the input tax credit based on valid invoices in GSTR-3B. They argued that certain suppliers had encountered technical issues while uploading data in GSTR-1, resulting in incorrect data showing up as ‘0’ tax items.
3. Unsatisfactory Response: The response provided by the petitioner was deemed unsatisfactory, leading to the issuance of GST DRC-01A. Subsequently, a notice under Section 73 of the State Goods and Services Tax Act, 2017 was issued, culminating in the assessment order (Exhibit P1) for an amount of Rs. 3,61,304. This amount includes the denied input tax credit of Rs. 1,62,526, interest at 79.5% amounting to Rs. 1,78,778, and a penalty of Rs. 20,000. A recovery notice (Exhibit P2) was also issued.
4. Supplier’s Delayed Tax Remittance: It was argued on behalf of the petitioner that the supplier/dealer had indeed collected the tax from them for the inward supply. The delay in remitting the tax to the government was attributed to the supplier/dealer.
5. Difference Between GSTR 2A and GSTR 3B: The essence of the dispute lies in the variation between the GSTR 3B, on which the petitioner based their input tax credit claim, and the GSTR 2A, which reflects the tax paid by the supplier/dealer.
6. Relevance of Previous Judgment: The petitioner’s counsel cited a judgment by the Kerala High Court dated 12.09.2023 in W.P(C).No.29769 of 2023. In this judgment, the court emphasized that denial of input tax credit solely based on differences between GSTR-2A and GSTR-3B may not be justifiable. The court ruled that if the assessee can provide evidence that they have indeed paid the tax to the supplier/dealer, who failed to remit it to the government, the denial of the input tax credit would not be correct.
7. Present Case Clarification: In the present case, the petitioner contended that this was not a case of non-payment of tax by the supplier/dealer. They argued that the tax was collected from them by the supplier/dealer, and this claim for input tax credit was reflected in GSTR 2A.
8. Court’s Decision: The court acknowledged the petitioner’s argument that the tax for which they claimed input tax credit was reflected in GSTR 2A, albeit with some delay. In light of this argument, the court held that the denial of input tax credit did not appear to be justified.
9. Opportunity for the Petitioner: The court granted the petitioner an opportunity to appear before the assessing authority with all relevant documents within seven days from the judgment. The assessing authority was directed to examine the documents, and if satisfied, to grant the petitioner the input tax credit that had been previously denied, issuing a revised order accordingly.
Conclusion: The Kerala High Court’s judgment in Geetha Agencies vs. Deputy Commissioner of State Tax serves as a reminder of the importance of a fair and evidence-based approach to input tax credit disputes. The court’s decision highlights that discrepancies between GSTR 2A and GSTR 3B should not automatically lead to denial of input tax credit. It is essential to consider the facts and evidence presented by the taxpayer. The court’s decision provides an opportunity for businesses to rectify such situations when they can prove that the input tax credit is valid and supported by accurate documentation.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
Instant writ petition has been filed impugning Exhibit P1 assessment order and Exhibit P2 recovery notice. The petitioner’s input tax credit for an amount of Rs.1,10769/-(SGST + CGST), has been denied on the ground that there is mismatch in GSTR 2A and GSTR 3B.
2. In reply to the show cause notice, writ petitioner/assessee had submitted that the petitioner had claimed the input tax as specified in GSTR-3B, based on valid invoices available with them. Petitioner also submitted that certain suppliers while uploading the data in GSTR- 1, due to certain technical problem in the website, the data was uploaded as ‘0’ tax items.
3. The reply submitted by the petitioner/assessee was not found convincing and satisfactory to drop the proceedings and GST DRC-01A was issued to the petitioner. Thereafter, notice under Section 73 of the State Goods and Services Tax Act, 2017 was issued and Exhibit P1 order came to be passed for an amount of Rs. 3,61,304/-, which would include denied input tax to an extent of Rs. 1,62,526/- + interest @ 79.5% Rs.1,78,778/- and penalty of Rs.20,000/-. For realisation of the said amount, revenue recovery notice Exhibit P2 has been issued.
4. Learned counsel for the petitioner submits that the supplier/dealer has remitted the tax collected from the petitioner for inward supply, with some delay. There is no difference between the GSTR 3B, on the basis of which the petitioner claimed the input tax credit and the GSTR 2A, reflecting the tax paid by the supplier/dealer. If the petitioner is given an opportunity, he will prove that the input tax credit claimed by him is correct and the tax amount for which the input tax credit claimed by the petitioner is truly reflected in GSTR 2A.
5. Learned counsel for the petitioner also placed reliance on the judgment of this Court dated 12.9.2023 in W.P(C).No.29769 of 2023, wherein this court held that denial of input tax credit merely on the ground that there is difference between GSTR-2A and GSTR-3B should not be correct, if the assessee, on the basis of the evidence and documents is able to prove that in fact he has paid the tax to supplier/dealer, who did not pay tax to the Government.
6. In the present case, learned counsel for the petitioner submitted that this is not a case of nonpayment of tax by supplier dealer. In fact the tax was collected by the supplier/dealer from the petitioner, for which he has claimed the input tax credit, is reflected in the form GSTR 2A.
7. Considering the said aspect of the matter that as per the stand of the petitioner/assessee, the tax for which the petitioner claimed input tax credit is reflected in Form GSTR 2A, though with some delay, the claim of the petitioner for input tax credit which has been denied in Exhibit P1 does not appear to be correct.
8. To prove his case, one opportunity is granted to the petitioner to appear before the Assessing authority, within seven days from today with all relevant documents.
The present writ petition is allowed. Impugned order Exhibit P1 and notice Exhibit P2 are set aside. Petitioner is directed to appear before the assessing authority within seven days from today with all relevant documents and on examination of the documents, if the assessing authority is satisfied that the petitioner’s claim for input tax credit denied by Exhibit P1 order, is bonafied, he be granted the said benefit and a revised order be issued.
