In WP (C) No. 30660 of 2023 -KER HC- Kerala High Court clarifies that ITC denial based on difference between GSTR 2A & 3B is not justified
Justice Dinesh Kumar Singh [19-09-2023]

Read Order: M/s Henna Medicals V. State Tax Officer Second Circle, State Goods and Service Tax Department & Ors.

Chahat Varma

New Delhi, October 5, 2023: The Kerala High Court has allowed a writ petition filed by M/s Henna Medicals (petitioner), challenging an assessment order and recovery notice issued by the tax authorities. The Court held that the taxpayer's claim for input tax credit cannot be denied merely on the difference between GSTR 2A and GSTR 3B.

The single-judge bench of Justice Dinesh Kumar Singh placed reliance on The State of Karnataka v. M/s Ecom Gill Coffee Trading Private Limited [LQ/SC/2023/246], wherein the Supreme Court had established that denying input tax credit to an assessee under the GST regime solely based on the difference between GSTR 2A and GSTR 3B was not justified.

The bench also referred to the case of Diya Agencies v. The State Tax Officer [LQ/KerHC/2023/1717], where it was observed that the assessment order, which denied input tax credit to the petitioner, could not be sustained. The matter was remanded back to the Assessing Officer with the directive to provide the petitioner with an opportunity to substantiate their claim for input tax credit. It was emphasized that if, upon examination of the evidence presented by the petitioner, the Assessing Officer was convinced that the claim was genuine and legitimate, the petitioner should be granted input tax credit. The mere absence of the said tax in Form GSTR-2A should not be deemed sufficient grounds to reject the assessee's claim for input tax credit.

In view thereof, the present writ petition was allowed. The court referred the matter back to the Assessing Authority for a thorough examination of the petitioner's evidence regarding their claim for input tax credit, without solely relying on Form GSTR 2A. The Assessing Authority was instructed to issue fresh orders in compliance with the applicable laws after a comprehensive review of the evidence presented by the petitioner.