AI Drafter 
TaxTMI 
TaxTMI 
2025 (8) TMI 776
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....Ms.S.Esai Rani W.P.(MD)No.21039 of 2024 : Mr.S.Karunakar W.P.(MD)No.6953 and 6954 of 2024 : Mr.S.Jai Kumar For Respondents : W.P.(MD)Nos.5198, 14543 of 2024 : Mr.N.Dilipkumar Senior Standing Counsel W.P.(MD)No.6655, 7610, 19972, 21306, 21039 of 2024 : Mr.R.Suresh Kumar Additional Govt. Pleader W.P.(MD)Nos.21934, 19861, 6953, 6954, 23476 of 2024 : Mr.J.K.Jayaselan Government Advocate W.P.(MD)No.20653 of 2024 : Mr.R.Gowrishankar Senior Standing Counsel W.P.(MD)No.7301 of 2024 : Mr.R.Suresh Kumar Government Advocate for R1 and R2, Mr.R.Senthil Kumar Central Government Standing Counsel for R3 W.P.(MD) No.24387 of 2022 : M/s.S.Ragaventhree Junior Standing Counsel COMMON ORDER The common question that arises in this batch of writ petitions is as to whether a demand for reversal of input tax credit could be sustained only on account of mismatch between Form GSTR 2A and Form GSTR-3B of a taxpayer. It is pertinent to note here that the petitioners have neither questioned nor addressed any arguments on the validity of Section 16(2)(c) or Section 16(2)(aa) (for the period post 01.01.2022), or the relevant Rules pertaining to available of input tax credit in th....
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.... order of the appellate authority is entertained. 4. Against the above background, the common question that arises for consideration in this batch of Writ petitions is as to the legality/correctness of orders of assessments/adjudications disallowing/reversing input tax credit on the ground of mismatch between GSTR 2A and GSTR 3B. 5. Case of the Petitioner: i) Section 16(1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as "the Act"), states that a registered person will be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business. ii) Section 16(2) of the Act contains a 'non-obstante clause' and provides that a recipient of supply would be entitled to ITC only on satisfaction of the conditions enumerated in the said sub-section. iii) Section 16(2)(c) read with the first part of Section 16(2) of the Act would provide that notwithstanding anything contained in Section 16, no registered person shall be entitled to credit of any input tax in respect of any supply of goods or services unless, tax charged in res....
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....eturn in Form GSTR-3B through which tax is paid and ITC is availed. There is no methodology/mechanism available to verify whether the supplier has in fact paid tax in respect of the supplies made. x) It is for this reason, the GST Council in their discussions also acknowledged that the intention is not to restrict the flow of ITC due to nonpayment of the GST on the output supplies made by the supplier. In fact, it was also recognised that recoveries could be made from the suppliers first and from the buyers only in exceptional circumstances such as missing suppliers/closure of business etc. Reliance was placed on Minutes of the 27th GST Council Meeting held on 04th May, 2018. xi) In the absence of above matching mechanism, Section 16(2)(c) continued to yield to Section 41 of the Act. The credit provisionally granted to the recipients remained intact in their hands. Such credit could be utilised by the recipients for payment of output tax liabilities as provided for in Section 41(2) of the Act. The law does not contemplate a mechanism through which a recipient can finalise such provisional credit on his own. xii) To fulfil the requirement of Section 16(2)(....
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.... 27.12.2022 and Circular No.193/5/2023 GST dated 17.07.2023. 7. Two questions arise for consideration viz., a) Whether the non-operationalization of returns, in Form GSTR 2, GSTR 1A and GSTR 3 has any effect of the validity of the proceedings denying the petitioner's claim of Input Tax Credit on the ground of mismatch between GSTR 3B and GSTR 2A ? b) What is the mechanism for resolving issues relating to denial of Input Tax Credit in case of discrepancy between GSTR 2A and GSTR 3B ? 8. Both the issues need not detain this Court for long, as the first question I would think stands answered/resolved by the Supreme Court in the case of Union of India v. Bharti Airtel Ltd. reported in (2022) 4 SCC 328. The second issue also appears to have been addressed by CBIC by issuance of Circular No. 183/15/2022-GST and Circular No. 193/05/2023-GST. 9. Before proceeding further it would be necessary to examine Section 16 of the Act in particular sub-section (2) to Section 16 of the Act which reads as under: "(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply ....
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.... tax on payment made by him 10[to the supplier] of the amount towards the value of supply of goods or services or both along with tax payable thereon." 10. From a reading of the above provision, it would be clear that the following conditions must be complied with by a claimant/recipient to be entitled to avail Input Tax Credit viz., (prior to 01.01.2022) a) The registered person ought to be in possession of a tax invoice or debit note from a supplier who is registered under the GST Act to claim ITC or or such other tax paying documents b) Registered person must have received the goods and/or services in question. c) The recipient must have furnished his returns under Section 39 of the Act. 11. Section 16 of CGST Act was amended by insertion of Clause (aa) to Section 16(2) of the Act and the relevant portion reads as under:- ".......Amendment inserted by Finance Act 2021 w.e.f. 1-1-2022 vide Noti.No.39/2021-Central Tax, dt.21-12-2021. (aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient....
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....ed in making GSTR 2 and GSTR 3 operational, returns in Form GSTR 3B was introduced in view of Form GSTR 3 and was intended to be a stopgap/temporary arrangement vide Notification No.10 of 2017-Central Tax dated 28.06.2017. In October 2019, by amending Rule 61(5) retrospectively Form GSTR-3B was regularized as specified return under Section 39 of the Act. The Automated system of returns and reconciliation contemplated under Sections 37 to 39 was formally done away with. 16. Against this background, question that arises for consideration is whether non operability of relevant statutory form in Form GSTR 2 and 3 would have any bearing on the claim of ITC under the GST Act. The above question need not detain us for long inasmuch as the Apex Court in the case of Union of India vs. Bharti Airtel Ltd., (2022) 4 SCC 328, had rejected similar contentions and held as under: "46. Reverting to the analysis of the issues and contentions done by the High Court, it is primarily focused on the grievance of the writ petitioner that due to non-operability of Form GSTR-2A at the relevant time (July to September 2017), it had been denied of access to the information about its electronic cr....
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....d need not be the primary source for doing self-assessment. The primary source is in the form of agreements, invoices/challans, receipts of the goods and services and books of accounts which are maintained by the assessee manually/electronically. These are not within the control of the tax authorities. This was the arrangement even in the pre-GST regime whilst discharging the obligation under the concerned legislation(s). The position is no different in the post-GST regime, both in the matter of doing self-assessment and regarding dealing with eligibility to ITC and OTL. Indeed, that self-assessment and declarations would be any way subject to verification by the tax authorities. The role of tax authorities would come at the time of verification of the declarations and returns submitted/filed by the registered person. 49. Section 16 of the 2017 Act deals with eligibility of the registered person to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business. The input tax credit is additionally recorded in the electronic credit ledger of such person under the Act. The ....
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.... ..... 54. The entire edifice of the grievance of the writ petitioner (Respondent 1) was founded on non-operability of Form GSTR-2A during the relevant period, which plea having been rejected as untenable and flimsy, it must follow that the writ petitioner/Respondent 1 with full knowledge and information derived from its books of accounts and records, had done self-assessment and assessed the OTL for the relevant period and chose to discharge the same by paying cash. Having so opted, it is not open to the respondent to now resile from the legal option already exercised. It is for that reason, the respondent has advisedly propounded a theory that in absence of (electronic-auto populated record) mechanism made available as per Sections 37 and 38, return filed in Form GSTR-3B is not ascribable to Section 39(9) of the 2017 Act read with Rule 61(5) of the 2017 Rules. This is yet another untenable plea taken by Respondent 1. For, the appellant having realised that the mechanism specified in Sections 37 and 38 of the 2017 Act cannot be put in place due to non-operability of the forms governing such mechanism, had to amend the rules to make a stopgap arrangement until the entire m....
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....ecision while doing such self-assessment. Non-performance or non-operability of Form GSTR-2A or for that matter, other forms, will be of no avail because the dispensation stipulated at the relevant time obliged the registered person to submit returns on the basis of such self-assessment in Form GSTR-3B manually on electronic platform. The provision contained in Section 39(9) of the 2017 Act and Rule 61 of the Rules framed thereunder, as applicable at the relevant time, apply with full vigour to the returns filed by the registered person in Form GSTR-3B. 67. Significantly, the registered person is not denied of the opportunity to rectify omission or incorrect particulars, which he could do in the return to be furnished for the month or quarter in which such omission or incorrect particulars are noticed. Thus, it is not a case of denial of availment of ITC as such. If at all, it is only a postponement of availment of ITC. The ITC amount remains intact in the electronic credit ledger, which can be availed in the subsequent returns including the next financial year. It is a different matter that despite the availability of funds in the electronic credit ledger, the registered ....
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.... a. Where the supplier has failed to file FORM GSTR-1for a tax period but has filed the return in FORM GSTR-3B for said tax period, due to which the supplies made in the said tax period do not get reflected in FORM GSTR-2A of the recipients. In such cases, the difference in ITC claimed by the registered person in his return in FORM GSTR-3B and that available in FORM GSTR-2A may be handled by following the procedure provided in para 4 below. b. Where the supplier has filed FORM GSTR-1 as well as return in FORM GSTR-3B for a tax period, but has failed to report a particular supply in FORM GSTR-1, due to which the said supply does not get reflected in FORM GSTR-2A of the recipient. In such cases, the difference in ITC claimed by the registered person in his return in FORM GSTR-3B and that available in FORM GSTR-2A may be handled by following the procedure provided in para 4 below. c. Where supplies were made to a registered person and invoice is issued as per Rule 46 of CGST Rules containing GSTIN of the recipient, but supplier has wrongly reported the said supply as B2C supply, instead of B2B supply, in his FORM GSTR-1, due to which the said supply does not get ....
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....t. of the eligible credit available in respect of invoices or debit notes, the details of which have been furnished by the suppliers under sub-section (1) of section 37 in FORM GSTR-1 or using IFF. Accordingly, the guidelines provided by Circular No. 183/15/2022-GST dated 27 th December, 2022 shall be applicable for verification of the condition of clause (c) of sub-section (2) of Section 16 of CGST Act for the said period, subject to the condition that availment of Input tax credit by the registered person in respect of invoices or debit notes, the details of which have not been furnished by the suppliers under sub-section (1) of section 37, in FORM GSTR-1 or using IFF shall not exceed 20 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been furnished by the suppliers under sub-section (1) of section 37 in FORM GSTR-1 or using IFF. This is clarified through an illustration below: Illustration: Consider a case where the total amount of ITC available as per FORM GSTR-2A of the registered person was Rs. 3,00,000, whereas, the amount of ITC availed in FORM GSTR-3B by the said registered person during the corre....
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....7, in FORM GSTR-1 or using the IFF shall not exceed 5 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been furnished by the suppliers under subsection (1) of section 37 in FORM GSTR-1 or using the IFF. 5. It is further clarified that consequent to insertion of clause (aa) to subsection (2) of section 16 of the CGST Act and amendment of rule 36(4) of CGST Rules w.e.f. 01.01.2022, no ITC shall be allowed for the period 01.01.2022 onwards in respect of a supply unless the same is reported by his suppliers in their FORM GSTR-1 or using IFF and is communicated to the said registered person in FORM GSTR-2B. 6. Further, it may be noted that proviso to rule 36(4) of CGST Rules was inserted vide Notification No. 30/2020-CT dated 03.04.2020 to provide that the condition of rule 36(4) shall be applicable cumulatively for the period February to August, 2020 and ITC shall be adjusted on cumulative basis for the said months in the return for the tax period of September 2020. Similarly, second proviso to rule 36(4) of CGST Rules was substituted vide Notification No.27/2021-CT dated 01.06.2021 to provide that the conditio....