Input tax credit mismatch in GSTR-3B and GSTR-2A must be examined under the binding GST circular procedure before disallowance.

Input tax credit could not be disallowed solely because GSTR-3B did not match GSTR-2A where a binding GST circular prescribed the procedure for dealing with such discrepancies. The Patna HC noted that the circular specifically covered cases where supplies were not reflected in GSTR-2A because the supplier had not filed GSTR-1, despite the recipient filing GSTR-3B, and required the assessing authority to apply the procedure in para 4 before rejecting the claim. The assessment and appellate orders were therefore set aside, and the matter was remitted for fresh consideration in accordance with the circular.

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Issues: Whether the disallowance of input tax credit on the basis of mismatch between GSTR-3B and GSTR-2A could stand without following the procedure prescribed in the binding GST circular.

Analysis: The assessment proceeded on the basis that the petitioner's input tax credit did not tally with the supplier-side reflection in GSTR-2A. The Circular F. No. CBIC-20001/2/2022-GST dated 27-12-2022 specifically addressed the situation where supplies do not get reflected in GSTR-2A because the supplier failed to file FORM GSTR-1, though the return in FORM GSTR-3B had been filed. The Circular required the discrepancy in ITC to be handled under the procedure prescribed in para 4, and the assessing authority was bound to follow that procedure while reconsidering the claim.

Conclusion: The assessment could not be sustained in its existing form and had to be redone in accordance with the Circular.

Final Conclusion: The assessment and appellate orders were set aside and the matter was remitted for fresh consideration in accordance with the prescribed GST circular.

Ratio Decidendi: Where a binding circular prescribes the procedure for dealing with an ITC mismatch arising from non-reflection in GSTR-2A, the assessing authority must follow that procedure before rejecting the credit claim.

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