ITC can’t be denied if disclosed in GSTR-9 but missed in GSTR-3B due to inadvertent error

The Hon'ble Calcutta High Court in the case of Laxmi Ghosh Versus The State of West Bengal & Ors. - 2025 (12) TMI 1185 - CALCUTTA HIGH COURT held that the Appellate Authority failed to provide reasons for rejecting the Petitioner's claim to set off IGST Input Tax Credit declared in the annual return GSTR-9 against the tax demand when the same was inadvertently missed in the monthly returns GSTR-3B, and set aside the Appellate Authority's order for non-consideration of the ITC claimed in GSTR-9 and inadequate reasoning, remanding the matter for fresh adjudication.

Facts:

Laxmi Ghosh ('the Petitioner') failed to claim Input Tax Credit in respect of IGST pertaining to the months of May 2018, June 2018 and July 2018 while filing the monthly returns in Form GSTR-3B.​

The State of West Bengal & Ors. ('the Respondent') issued a Show Cause Notice under Section 73 of the CGST Act for the unclaimed ITC.​

The Petitioner contended that she had, by mistake, not claimed ITC although she was eligible therefor in respect of the financial year 2018-19, and that she had rectified the mistake by claiming the same while uploading Form GSTR-9 for the said financial year. The Petitioner submitted that upon having claimed ITC in respect of IGST to the tune of Rs. 3,54,457.99, the same should be offset against the demand of the tax on account of CGST and SGST and the Petitioner would only be liable to pay a sum of Rs. 83,608.07 on account of taxes due and payable along with interest.​

The Respondent contended that the Petitioner's plea was devoid of logic, facts & proper explanation and that necessary documents were absent.​

The Petitioner's grievance was against the order passed by the Appellate Authority under Section 107 of the WBGST/CGST Act, 2017 which dismissed her appeal without proper reasoning or consideration of the ITC claimed in GSTR-9. The Petitioner approached the Court through a writ petition.​

Issue:

Whether the Appellate Authority was justified in rejecting the Petitioner's claim to set off IGST Input Tax Credit declared in the annual return GSTR-9 against the tax demand when the same was inadvertently missed in monthly returns GSTR-3B?

Held:

The Hon'ble Calcutta High Court in Laxmi Ghosh Versus The State of West Bengal & Ors. - 2025 (12) TMI 1185 - CALCUTTA HIGH COURT held as under:

• Observed that, the Appellate Authority concluded 'without indicating as to why, the Petitioner's plea was 'devoid of logic, facts & proper explanation'' and that this conclusion was made without proper reasoning.​
• Noted that, the Appellate Authority observed that necessary documents were absent but there is no indication as to what were the necessary documents that were absent.​
• Observed that, the Appellate Authority has not indicated as to why claiming of ITC in respect of IGST in Form GSTR-9 would not ensure to the benefit of the Petitioner, as to why the said amount could not be offset with the claim of the department on account of CGST and SGST.​​
• Noted that, the Petitioner had also responded to the SCN demanding under Section 73 of the Act, explaining the error.​
• Directed that, the impugned order passed by the Appellate Authority be set aside and the matter be remanded back to the Appellate Authority for fresh consideration.​​
• Directed the Appellate Authority to pass a reasoned order within two weeks of receiving fresh submissions from the Petitioner.​

Our Comments:

The judgment emphasizes the mandatory requirement under administrative law for adjudicating and appellate authorities to provide reasoned orders, particularly when rejecting contentions raised by taxpayers. The principle that orders must be speaking orders with adequate reasons has been consistently upheld by courts across various tax statutes.

The Division Bench decision in Pioneer Cooperative Car Parking Servicing And Construction Society Limited Versus State Of West Bengal And Anr. - 2025 (2) TMI 347 - CALCUTTA HIGH COURT is significant. In that case, the Division Bench held that GSTR-9 returns should also be considered in case the Input Tax Credit is not reflected in GSTR-3B, and remanded the matter for re-adjudication by considering the GSTR-9 return. It observed that the adjudicating authority passed a summary order under Section 73(9) of the CGST Act without properly considering the annual return in GSTR-9. This aligns with the present case where the Appellate Authority failed to consider the ITC claimed in GSTR-9.​

Relevant Provisions:

Rule 80 of the CGST Rules, 2017

80. Annual return .-

“(1) Every registered person, other than those referred to in the second proviso to section 44, an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and anon-resident taxable person, shall furnish an annual return for every financial year as specified under section 44 electronically in FORM GSTR-9 on or before the thirty-first day of December following the end of such financial year through the common portal either directly or through a Facilitation Centre notified by the Commissioner:

Provided that a person paying tax under section 10 shall furnish the annual return in FORM GSTR-9A .

(1A) Notwithstanding anything contained in sub-rule (1), for the financial year 2020-2021 the said annual return shall be furnished on or before the twenty-eighth day of February, 2022.

(2) Every electronic commerce operator required to collect tax at source under section 52 shall furnish annual statement referred to in sub-section (5) of the said section in FORM GSTR -9B

(3) Every registered person, other than those referred to in the second proviso to section 44, an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, whose aggregate turnover during a financial year exceeds five crore rupees, shall also furnish a self-certified reconciliation statement as specified under section 44 in FORM GSTR-9C along with the annual return referred to in sub-rule (1), on or before the thirty-first day of December following the end of such financial year, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.

(3A) Notwithstanding anything contained in sub-rule (3), for the financial year 2020-2021 the said self-certified reconciliation statement shall be furnished along with the said annual return on or before the twenty-eighth day of February, 2022.”

Section 44 of the CGST Act

'(1) Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person shall furnish an annual return which may include a self-certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year, with the audited annual financial statement for every financial year electronically, within such time and in such form and in such manner as may be prescribed:

Provided that the Commissioner may, on the recommendations of the Council, by notification, exempt any class of registered persons from filing annual return under this section:

Provided further that nothing contained in this section shall apply to any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor-General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.'​

 (Author can be reached at [email protected])