Rajasthan HC: Authorities to Make a Process for Matching GST Credit Note with ITC Reversal

With regard to the process for matching the credit note of the supplier with the ITC reversal, the Rajasthan High Court seeks recommendations from the authorities.

In the absence of any legal obligation cast on the respondent to perform the matching actions when the applicant wishes to avail the decrease in the liability of tax, proof of reversal via the recipient is needed to be furnished via the supplier, The bench of Justice Manindra Mohan Shrivastava and Justice Praveer Bhatnagar.

A problem with the absence of the appropriate process for matching the credit note of the supplier with the GST Input tax credit reversal by the recipient is been sought by the applicant/taxpayer. It seems that in the past, there was a requirement outlined in Section 43 of the CGST Act/RGST Act that mandated the department to carry out matching procedures. However, this provision was subsequently removed.

The petitioner has contended that it is practically unfeasible for them to provide a certificate, acquired from the recipient, as evidence of the reversal of credit by the recipient, for the purpose of benefiting from a reduction in tax liability. Instead, the responsibility of conducting the matching process should lie with the department, and the eligibility for a tax liability reduction should not be contingent upon presenting any certificate or evidence of ITC reversal by the recipient.

“Though we are not granting any interim order at this stage, learned counsel for the Union of India is directed to place before the Court the appropriate suggested mechanism,” the court stated at the time of listing the case on October 5, 2023.