Input Tax Credit Upheld: Procedural Error Cannot Deny Legitimate Tax Credit When Substantive Compliance Demonstrated

HC allowed petitioner's challenge to assessment order denying Input Tax Credit (ITC). Despite supplier's initial error in GST returns, court found taxes were paid and ITC should not be denied. Order was quashed and matter remanded for fresh assessment, directing assessing officer to reconsider with opportunity for petitioner's hearing within two months.

---

---

Issues involved: Assessment order denying Input Tax Credit (ITC) due to alleged error by supplier in GST returns.

Summary:
1. The petitioner challenged an assessment order denying Input Tax Credit (ITC) on grounds of non-application of mind. The dispute arose from purchases made by the petitioner from a supplier in West Bengal, where the supplier erroneously reported zero IGST in Form GSTR-1 but rectified the error in the GSTR-3B return. The assessing officer did not consider this rectification and denied ITC.

2. The petitioner argued that the supplier had paid the requisite taxes and rectified the error in the subsequent return, making the purchase genuine. The Additional Government Pleader contended that the petitioner should have filed a statutory appeal and disputed questions of facts cannot be addressed under Article 226.

3. The Court examined sample invoices and GST returns of the supplier, finding that the error in Form GSTR-1 was prima facie correct. It emphasized that if taxes were paid by the supplier, the recipient should not be denied ITC.

4. The impugned order stated that the recipient is responsible for verifying ITC claims and rectifying errors, even if made by the supplier. However, the Court noted that the SGST component did reach Tamil Nadu, contradicting the order's reasoning.

5. Consequently, the Court quashed the impugned order and remanded the matter to the assessing officer for re-consideration, directing a fresh assessment order within two months, after providing the petitioner with a reasonable opportunity, including a personal hearing. The case was disposed of with no costs incurred.

---