GST input tax credit mismatch and Rule 36 reconciliation questioned; assessment set aside and remitted for fresh orders, recovery stayed.

Dispute concerns denial of input tax credit claimed in GSTR 3B due to mismatch with auto populated GSTR 2A and the permissible reconciliation under Rule 36(4). The legal question was whether the pre amendment 20% tolerance (later reduced) governed assessment for the year in question and whether denial without supplier certification was lawful. The impugned assessment order was set aside because the amended Rule 36(4) and Notification No. 49/2019-Central Tax alter permissible credit reconciliation; the matter was remitted for fresh assessment in accordance with the amended provision. All recovery proceedings are stayed pending fresh orders to be completed within six weeks; writ petition allowed without costs.

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Issues:
Impugned order under Section 74 of TNGST Act, 2017 for assessment year 2017-18 based on mismatch between GSTR 3B and GSTR 2A input tax credit.
Discrepancy in input tax credit availed by petitioner from Tamil Nadu Cement Corporation (TNCC) Limited and RAMCO Limited.
Interpretation of Rule 36 of CGST Rule, 2017 before and after amendments.
Validity of impugned order and consideration of Rule 36(4) changes.
Judgment on setting aside impugned order and remitting case back for fresh orders.

Analysis:
The petitioner challenged an order passed by the respondent under Section 74 of the TNGST Act, 2017 for the assessment year 2017-18, citing a discrepancy between the input tax credit claimed in GSTR 3B and the auto-populated information in GSTR 2A. The mismatch in input tax credit was detailed, showing a significant difference in CGST and SGST amounts. The petitioner responded to the notices, explaining the differences, particularly concerning supplies from TNCC Limited and RAMCO Limited.

Regarding the supplies from TNCC Limited, the petitioner provided a certificate to show no discrepancy in the availed credit between GSTR 3B and GSTR 2A. However, for supplies from RAMCO Limited, although the petitioner had records to support no discrepancy, a certificate from RAMCO Limited was lacking. The petitioner argued that Rule 36 of CGST Rule, 2017 allowed a 20% variation initially, which was later amended to 10%.

The petitioner highlighted the changes in Rule 36(4) before and after the amendments, emphasizing the 20% limit on credit availed for invoices not uploaded by suppliers. The petitioner contended that the denied credit was less than 20%, rendering the impugned order arbitrary. The court noted the changes in Rule 36(4) and set aside the impugned order, remitting the case back to the respondent for fresh orders based on the provisions as amended by Notification No. 49/2019-Central Tax.

The court directed all recovery proceedings to be halted pending the fresh orders, to be issued within six weeks. The judgment allowed the writ petition, with no costs incurred, and closed the connected Miscellaneous Petitions.

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