GST - Input Tax Credit Cannot Be Denied To Purchaser Merely Because Seller Didn't Record Transaction In GSTR-2A Form: Kerala High Court

The Kerala High Court recently held that Input Tax Credit (ITC) cannot be denied to a purchaser merely on ground of non-reflection of the transaction in the GSTR-2A Form. 

Remanding the matter back to the Assessing Officer to give opportunity to the purchaser who is the petitioner herein, Justice Dinesh Kumar Singh observed:

"If on examination of the evidence submitted by the petitioner, the assessing officer is satisfied that the claim is bonafide and genuine, the petitioner should be given input tax credit. Merely on the ground that in Form GSTR-2A the said tax is not reflected should not be a sufficient ground to deny the assessee the claim of the input tax credit". 

The petitioner was aggrieved that the claim for ITC of Rs.44,51,943.08/- for CGST and SGST had been limited at the excess claim of Rs.1,04,376.05/- as CGST. The same amount as SGST credit had been denied to the petitioner on the ground that as per the GSTR 2A in respect of invoice supply, the tax payer would only be eligible for the input tax amount shown in CGSTR 2A.

The counsel for the petitioner averred that the claim of input tax credit could not be denied merely on ground of the amount mentioned in the GSTR 2A for which the petitioner did not have any control. It was argued that the Assessing Authority ought to independently examine the petitioner's claim for ITC, irrespective of the the amount mentioned in the GSTR 2A.

The counsel relied upon Section 16(2) of the GST Act which lays down that no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless the conditions mentioned in the provision had been fulfilled. The counsel thus averred that the petitioner had fulfilled all the conditions mentioned therewith, and that the tax had also been paid to the seller dealer, who in turn had issued a valid tax invoice. 

The petitioner was thus aggrieved that despite fulfilling the stipulated conditions, the assessing authority had reversed the credit availed and directed the petitioner to deposit the tax to the extent of disallowance of input tax credit. 

The counsel also drew the attention of the Court to a plethora of decisions in this regard which had laid down that ITC could not be denied if the assessee had genuinely paid the tax to the seller dealer, and no collusion could be found between the parties. 

Taking note of the submissions advanced, and the impugned assessment order, the Court opined that the petitioner’s claim for higher input tax had been denied only on ground of the amount not being mentioned in the GSTR 2A. 

"If the seller dealer (supplier) has not remitted the said amount paid by the petitioner to him, the petitioner cannot be held responsible. Whether the petitioner has paid the tax amount and the transactions between the petitioner and seller dealer are genuine are the matter on facts and evidence. The petitioner has to discharge the burden of proof regarding the remittance of tax to the seller dealer by giving evidence as mentioned in the Judgment of the Supreme Court in The State of Karnataka v. M/S. Ecom Gill Coffee Trading Private Limited (2023)," the Court noted. 

It thus held that the impugned assessment order, to the extent of denying ITC to the petitioner as unsustainable, and remanded the matter to the Assessing Officer, and directed the said authority to afford an opportunity to the petitioner give evidence in respect of the claim for ITC. 

The Court also directed the petitioner to appear before the assessing authority within fifteen days with all evidence to prove the higher claim for ITC. 

"After examination of the evidence placed by the petitioner/assessee, the assessing authority will pass a fresh order in accordance with law," the Court added, while disposing the plea. 

Counsel for the Petitioner: Advocates Aji V. Dev, H. Abdul Lathief, Alan Priyadarshi Dev, and S. Sajeevan

Counsel for the Respondents: Government Pleader Jasmine M.M. 

Citation: 2023 LiveLaw (Ker) 495

Case Title: Diya Agencies v. State Officer & Ors. 

Case Number: W.P.(C) No.29769 of 2023

Click Here To Read/Download The Judgment