ITC Cannot Be Denied Solely Over GSTR-3B, GSTR-2A Mismatch: GSTAT Lucknow

The GST Appellate Tribunal (GSTAT), Lucknow on 18 September held that a mismatch between Input Tax Credit (ITC) claimed in GSTR-3B (a self-declared summary return) and the credit reflected in GSTR-2A (an auto-generated statement of supplier filings), by itself, cannot justify denial of the credit.

A Division Bench of Judicial Member Narendra Kumar and Technical Member Alok Chopra remanded R R Infrastructure Projects' ITC dispute for fresh consideration, directing the adjudicating authority to verify the claim on a category-wise and invoice-wise basis. The Tribunal observed:

“The entire difference between GSTR-3B and GSTR-2A cannot be treated as ineligible ITC without examining the appellant's reconciliation and supporting evidence. The adjudicating authority is therefore required to undertake a category-wise and invoice-wise verification of the documents and evidence furnished by the appellant.”

The dispute concerned ITC claimed by R R Infrastructure Projects for the financial year 2017-18. The Department had raised a tax demand of about Rs. 6.35 lakh after finding a difference between the ITC claimed in GSTR-3B and the credit reflected in GSTR-2A.

The taxpayer submitted that the entire difference could not be treated as wrongly claimed ITC. It said some suppliers had incorrectly reported business-to-business transactions as business-to-consumer transactions and reported tax under the wrong GST head. The difference also included credit relating to the Reverse Charge Mechanism (RCM), credit that had not been claimed and credit that was subsequently reversed.

R R Infrastructure Projects relied on CBIC Circular No. 183/15/2022-GST, which provides a mechanism for dealing with differences between GSTR-3B and GSTR-2A for 2017-18 and 2018-19. The Circular recognises that such differences may arise from suppliers' reporting errors during the initial years of GST implementation.

The Department opposed the appeal, maintaining that the excess ITC was recoverable. It also objected to certain certificates produced by the taxpayer since they had been obtained after the First Appellate Authority had passed its order.

The Tribunal held that the certificates could be considered under the CBIC Circular. It also observed that ITC relating to RCM transactions could not be examined merely by comparing GSTR-3B with GSTR-2A, as such transactions follow a different mechanism for payment of tax.

It clarified that R R Infrastructure Projects would still have to establish its entitlement to the ITC. However, the authorities were required to examine the relevant invoices, reconciliation and supporting evidence rather than reject the entire difference as ineligible ITC.

Accordingly, the GSTAT allowed the appeal and remanded the matter to the adjudicating authority for fresh consideration after giving the taxpayer an opportunity to produce its documents and submissions.

For the Appellant: CMA Manoj Kumar Mishra

For the Respondents: Shri Rajesh Kumar Singh, Deputy Commissioner, SGST.