The Gauhati High Court, Kohima Bench, set aside the order denying GST Input Tax Credit (ITC) to ITI Limited and held that the taxpayer must be allowed to rectify discrepancies between GSTR-1 and GSTR-3B.
The Court also affirmed that the assessee is entitled to avail the benefit of Section 16(5) of the CGST Act, 2017.
The petitioner, ITI Limited, a public sector undertaking in the telecommunications sector, represented by Kulbushan Shukla, challenged the order dated April 30, 2024, passed by the Assistant Commissioner under Section 73 of the CGST Act.
The order raised a tax demand due to a mismatch between GSTR-1 and GSTR-3B and denied Input Tax Credit (ITC) on the ground that it was claimed beyond the time limit prescribed under Section 16(4).
U/s 75(12), the Revenue Department treated the excess liability reflected in GSTR-1 as “self-assessed tax” and proceeded to recover it without issuing a notice or granting a chance to explain the discrepancy.
Applicant’s counsel, P. Agarwal, claimed that GSTR-1 is only a statement of outward supplies and cannot be considered as a conclusive self-assessment. It was mentioned that bona fide errors must be allowed to be corrected, relying on judicial precedents claiming the right to rectify clerical mistakes.
Z. Kulnu, represented the respondent.
Justice Devashis Baruah remarked that under Rule 88C of the CGST Rules, in case of a mismatch between GSTR-1 and GSTR-3B, the proper officer should issue an intimation and provide the taxpayer a chance either to pay the differential tax or provide an explanation.
The Court stated that the insertion of Section 16(5) by the Finance Act, 2024, with retrospective effect from 01.07.2017, authorises ITC claims for FY 2018-19 if returns were filed up to 30.11.2021. As the applicant had filed the return dated 13.03.2021, the ITC claim was held to be valid.
The tax credit denial based on delay was no longer sustainable as per the retrospective amendment, and that substantive rights cannot be defeated by procedural constraints, the Court held.
Imporant: How GST Software Resolves GSTR-3B & 2A/2B ITC Mismatches
Subsequently, the court quashed the impugned order on 30.04.2024.
| Case Title | M/s ITI Ltd. vs Union of India & Ors |
| Case No. | WP(C)/150/2024 |
| For Petitioner | Mr. P. Agarwal |
| For Respondent | Mr. Z. Kulnu |
| Gauhati High Court | Read Order |
