Input tax credit denial and GSTR-3B vs GSTR-2A mismatch: COVID s.168A extended s.73 limits; reassessment remanded

The dominant issue was whether an assessment denying ITC under s. 73 was barred by limitation and thus without jurisdiction. The HC held that while s. 73(9) mandates issuance within three years from the due date for annual return, s. 168A, with a non-obstante clause, authorises the Government to extend time limits during force majeure; COVID-19 qualified as force majeure, and the impugned extension notifications were not ultra vires, so the limitation challenge failed. A further issue was the manner of reconciling ITC in GSTR-3B vis-à-vis GSTR-2A; in light of the relevant GST circular, the assessment was set aside and remanded for a fresh order granting the circular's benefit.

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Issues Involved:
1. Denial of Input Tax Credit (ITC)
2. Limitation for passing the assessment order u/s 73(9) of the CGST Act
3. Validity of Notifications extending the time limit u/s 168A of the CGST Act
4. Application of Circular No. 183/15/2022-GST dated 27.12.2022

Summary:

1. Denial of Input Tax Credit (ITC):
The petitioner, a registered dealer under the CGST/SGST Act, challenged the Order-in-Original No. 11/2023/GST dated 21.06.2023, which denied the petitioner's claim for ITC amounting to Rs. 1,16,75,250/- for the period from July 2017 to September 2017. The petitioner argued that the omission to report inward and outward supplies during this period was due to the initial rollout issues of the GST system, including the non-availability of Form GSTR-2A.

2. Limitation for passing the assessment order u/s 73(9) of the CGST Act:
The petitioner contended that the assessment order was barred by limitation as per Section 73(10) of the GST Act, which mandates that proceedings u/s 73(9) must be concluded within three years from the last date of filing GSTR-9 for the relevant year. The last date for filing the return in GSTR-9 was 07.02.2020, making the deadline for completing the proceedings 07.02.2023. The impugned order was passed on 21.06.2023, and the demand notice was issued on 14.07.2023, thus exceeding the prescribed limitation period.

3. Validity of Notifications extending the time limit u/s 168A of the CGST Act:
The petitioner challenged the notifications No. 13/2022-Central Tax dated 05.07.2022 and No. 09/2023-Central Tax dated 31.03.2023, which extended the time limit for issuance of the order u/s 73(9) to 30.09.2023 and 31.12.2023, respectively. The petitioner argued that these notifications were beyond the powers conferred u/s 168A of the Act, as there was no force majeure justifying the extension. However, the court held that COVID-19 constituted a force majeure, and the notifications were validly issued based on the GST Council's recommendations and the Supreme Court's suo motu order.

4. Application of Circular No. 183/15/2022-GST dated 27.12.2022:
The petitioner argued that the Assessing Officer did not provide time to comply with the provisions of Circular No. 183/15/2022-GST, which addresses discrepancies between ITC claimed in Form GSTR-3B and that available in Form GSTR-2A for FY 2017-18 and 2018-19. The court agreed that the petitioner should be given the benefit of this Circular. Consequently, the assessment order was set aside, and the matter was remanded back to the Assessing Authority to pass a fresh assessment order in compliance with the Circular.

Conclusion:
The writ petition was dismissed regarding the challenge to the notifications extending the time limit. However, the assessment order was set aside, and the matter was remanded back to the Assessing Authority to pass a fresh assessment order, giving the petitioner the benefit of Circular No. 183/15/2022-GST dated 27.12.2022. The petitioner is directed to appear before the Assessing Authority with relevant documents on 26.02.2024. No order as to costs.

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