Allahabad HC: GSTN Absence in Supplier’s Certificate Not Grounds to Deny GST ITC

The Allahabad High Court in a ruling has held that the lack of GSTN in a supplier certificate is not a true foundation to refuse the input tax credit (ITC) and asked the tax authorities to reconsider the applicant’s claim.

A business entity Bhagwan Das Agrahari, submitted a writ petition challenging the orders passed via the state of Uttar Pradesh and two other respondents.

From the proceedings started u/s 73 of the UP GST act the dispute has emerged where the applicant was accused of wrongly claiming ITC. The petitioner’s request to challenge the tax authorities’ decision was turned down without a thorough review of the evidence presented.

On 27.12.2022, the applicant laid on a circular of the government which cites that when the supply value is less than Rs 5 lakh then the certificate of the supplier is enough to verify the ITC claims.

The applicant in adherence with this circular has furnished all the needed supplier certificates. The tax department has disregarded such documents claiming that GSTN numbers were not cited and therefore denied the claim of ITC.

The decision of the department has been defended citing that the applicant is unable to establish the genuineness of the transactions. The department claims that the ITC was claimed incorrectly and that the orders denying credit were statutorily justified.

The applicant opposes such claims claiming that GSTN numbers were cited in the certificates of the supplier and that the tax authorities incorrectly recorded the points. The circular of the government permitted the usage of the supplier certificates for ITC claims which makes the rejection arbitrary and unlawful, applicant outlines.

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Post analyzing the records a single bench led by Justice Piyush Agrawal verified that the GSTN numbers were shown in the certificates and concluded that the refusal of ITC was based on a wrong premise.

It was carried by the court that the applicant furnished the certificates as per the order of the Government and the ITC cannot be refused on frivolous technical grounds.

The impugned orders have been set aside by the court and remanded the case to the original authority for fresh adjudication. The Allahabad High Court directed the tax department to consider all provided materials, give a reasoned decision, and issue the order within three months.

Also, the court said that any deposited amount by the applicant shall be within the final decision of the tax department. The writ petition was permitted.