Place of Supply & ITC Denial- Wrong POS has Mentioned in GSTR1 By Supplier

[NILESH PITALE]

Dear Expert

In One of Our Scrutiny Case, Officer Propose to disallowed the ITC

Fact : We are Registered Under Maharashtra, We Purchased the Goods from Rajasthan and Directly Despatched to customer of Delhi State, We Satisfied all the Condition of Section 16. But Our Supplier has filed Place of Supply Delhi instead of Maharashtra in his GSTR-1

Officer is not allowing ITC on the ground that Wrong POS as reflected in our 8A, Please Guide how to defend the case,

[Raam Srinivasan Swaminathan Kalpathi]

Dear Querist

This is purely a technical lapse on the part of the supplier in a Bill to Ship to transaction which definitely does not warrant ITC reversal. I trust the supplier has charged IGST. In that case as all the other conditions in Section 16 stand satisfied please obtain a corrigendum from the supplier reflecting the correct place of supply with proper documentary proof. This should suffice if what was charged is IGST. If the Proper Officer passes an adverse order you have a strong case before FAA.

[Sadanand Bulbule]

The proposed disallowance of ITC is legally untenable because the transaction is strictly governed by Section 10(1)(b) of the IGST Act (Bill To-Ship To), which mandates that the statutory Place of Supply is your principal place of business (Maharashtra), regardless of the physical delivery to Delhi. Since all substantive conditions under Section 16(2) are satisfied, a clerical, bona fide error by the supplier in their GSTR-1 cannot override the law or strip you of your vested right to the credit.

[KASTURI SETHI]

Technical error only. No revenue loss at all. The buyer cannot be penalized because of the supplier's fault. There are case laws in favour of the tax payer (buyer) on this issue. The department's stand is not legally correct.

Well replied by both experts.

[KASTURI SETHI]

The ratio of the following High Court judgement is applicable to the instant issue.

2024 (12) TMI 399 - KERALA HIGH COURT - Rejimon Padickapparambil Alex Versus Union of India

[Shilpi Jain]

if the invoice issued by supplier is proper, the credit should not be denied. the supplier should be given an opportunity to rectify his GSTR-1.

There are some HC decisions on this aspect.

AI Summary

Place of supply mismatch in GSTR-1 cannot override ITC where bill-to-ship-to conditions and credit requirements are otherwise satisfied.
Input tax credit was questioned in a bill-to-ship-to transaction where the buyer's supplier reflected an incorrect place of supply in GSTR-1. The discussion centres on whether a clerical mistake by the supplier, shown as a return mismatch, can justify denial of ITC when the substantive conditions under section 16 are otherwise satisfied. It notes that the place of supply is governed by section 10(1)(b) of the IGST Act, and that an incorrect GSTR-1 entry is a technical lapse that may be corrected by the supplier.