Rajasthan High Court Seeks A Mechanism Matching Supplier's Credit Note With ITC Reversal, From Authorities

The Rajasthan High Court has asked for suggestions from the authorities with respect to a mechanism for matching a supplier's credit note with input tax credit (ITC) reversal.

The bench of Justice Manindra Mohan Shrivastava and Justice Praveer Bhatnagar has found that in the absence of any statutory obligation cast on the respondent to undertake a matching exercise if the petitioner is willing to claim a reduction in tax liability, proof of reversal by the recipient is to be provided by the supplier.

The petitioner/assessee raised an issue regarding the absence of a proper mechanism for matching the credit note of the supplier with the ITC reversal by the recipient. It appears that earlier there was a provision under Section 43 of the CGST Act/RGST Act obligating the matching exercises to be undertaken by the department. The provision was later omitted.

The petitioner submitted that it is not practically possible for the petitioner to submit a certificate after obtaining the same from the recipient as proof of reversal of credit by the recipient in order to avail of a reduction in tax liability. Instead, it is for the department to undertake the matching exercise, and the claim of reduction in tax liability should not be made dependent upon the production of any certificate or proof of reversal of ITC by the recipient.

“Though we are not granting any interim order at this stage, learned counsel for the Union of India is directed to place before the Court the appropriate suggested mechanism,” the court, while listing the matter on October 5, 2023, said.

Counsel For Petitioner: Sanjeev Nair

Counsel For Respondent: Devesh Yadav

Case Title: Hindustan Unilever Limited Versus Union Of India

Case No.: D.B. Civil Writ Petition No. 13617/2023

Click Here To Read The Order