Kerala HC: Buyer Can’t Be Refused for GST Credit Due to Seller’s GSTR-2A Omission

ITC could not be restricted to the purchaser only on the basis of the non-reflection of transaction in the GSTR-2A form, Kerala High Court ruled.

Justice Dinesh Kumar Singh ordered the issue to be sent back to the Assessing Officer so that the purchaser, who is the petitioner here, could have a chance.

“If on examination of the evidence submitted by the petitioner, the assessing officer is satisfied that the claim is bonafide and genuine, the petitioner should be given an input tax credit. Merely on the ground that in Form GSTR-2A the said tax is not reflected should not be a sufficient ground to deny the assessee the claim of the input tax credit”.

The petitioner was dissatisfied because their request for an Input Tax Credit (ITC) of Rs. 44,51,943.08 for both Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) was restricted to only Rs. 1,04,376.05 as CGST. Additionally, they were denied the same amount as SGST credit because the tax authorities relied on the information in GSTR 2A, stating that a taxpayer could only claim GST input tax credits based on the amounts shown in GSTR 2A for invoice supplies.

The petitioner’s legal representative argued that denying the ITC claim solely based on the figures in GSTR 2A, over which the petitioner had no control, was unjustifiable. They contended that the Assessing Authority should independently assess the petitioner’s eligibility for ITC, disregarding the amounts listed in GSTR 2A.

The legal representative referred to Section 16(2) of the GST Act, which states that a registered person cannot claim an input tax credit for any supply of goods or services unless they meet the specified conditions. The legal representative argued that the petitioner had indeed satisfied all the conditions, including payment of tax to the selling dealer, who had issued a valid tax invoice.

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The petitioner was therefore displeased that, despite meeting these requirements, the assessing authority had revoked the claimed credit and instructed the petitioner to pay the tax equivalent to the disallowed input tax credit.

Additionally, the legal representative pointed out numerous court decisions that supported the idea that input tax credit should not be denied if the taxpayer genuinely paid the tax to the selling dealer and no collusion was evident between the parties.

After considering these arguments and reviewing the contested assessment order, the Court concluded that the petitioner’s request for a higher input tax credit had been rejected solely because the amount was not mentioned in GSTR 2A.

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“If the seller dealer (supplier) has not remitted the said amount paid by the petitioner to him, the petitioner cannot be held responsible. Whether the petitioner has paid the tax amount and whether the transactions between the petitioner and seller dealer are genuine are matters of facts and evidence. The petitioner has to discharge the burden of proof regarding the remittance of tax to the seller dealer by giving evidence as mentioned in the Judgment of the Supreme Court in The State of Karnataka v. M/S. Ecom Gill Coffee Trading Private Limited (2023),” the Court noted.

Therefore, it concluded that the challenged assessment order, in terms of rejecting the petitioner’s Input Tax Credit (ITC), was not supportable. As a result, it sent the case back to the Assessing Officer (AO), instructing them to allow the petitioner a chance to provide evidence related to their ITC claim.

The Court also instructed the petitioner to present themselves before the assessing authority within fifteen days, along with all the necessary evidence to substantiate their request for a higher ITC.

“After examination of the evidence placed by the petitioner/assessee, the assessing authority will pass a fresh order in accordance with the law,” the Court added while disposing of the plea.