Order to Denial Of GST Input Tax Credit Due To Wrong GSTIN Indication Quashes Madras HC 

Tvl. Hansraj and Company Vs Assistant Commissioner (Madras High Court)

In a significant legal battle between Tvl. Hansraj and Company and the Assistant Commissioner, the Madras High Court delved into the matter of denying Input Tax Credit (ITC) based on discrepancies between GSTR-3B and GSTR-2A, shedding light on the implications of clerical errors in GSTIN indication.

Detailed Analysis:

1. Background of the Case: The petitioner, a registered taxpayer under GST laws, faced disallowance of claimed Input Tax Credit (ITC) due to alleged discrepancies between their GSTR-3B return and GSTR-2A return. The issue arose from a mismatch in invoice details.

2. Explanation by the Petitioner: Tvl. Hansraj and Company clarified that the relevant invoice was issued by their supplier, M/s. Kirthi Enterprises, but the supplier mistakenly indicated the GSTIN of the petitioner’s sister concern, Premier Corporations. Despite providing this explanation, the tax authority proceeded with imposing tax, interest, and penalty.

3. Court’s Finding and Conclusion: The Madras High Court scrutinized the documents presented, including the invoice and the supplier’s GSTR return, revealing a clerical error in indicating the GSTIN. Recognizing the potential injustice faced by the petitioner, the court quashed the assessment order and remanded the matter to the assessing officer. The petitioner was granted a fair opportunity to rectify the error, emphasizing the need for due process and fairness in such cases.

Conclusion: The ruling of the Madras High Court in the case of Tvl. Hansraj and Company vs Assistant Commissioner serves as a precedent highlighting the importance of addressing clerical errors and ensuring fairness in GST compliance. By providing recipients with opportunities to rectify such errors, the court upholds principles of justice and equity in tax administration. This judgment emphasizes the significance of meticulousness in GST filings and the need for a balanced approach in resolving disputes between taxpayers and tax authorities.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

The petitioner assails an assessment order dated 25.08.2023 by which the Input Tax Credit (ITC) claimed by the petitioner was disallowed on the ground that the details submitted in the petitioner’s return did not tally with that in the GSTR-2A return.

2. The petitioner is a registered person under applicable GST laws. He received show cause notice dated

27.01.2023 alleging that he had made an excess claim of ITC and that this was evident on comparing his GSTR-3B return with the GSTR-2A return. By reply dated 01.08.2023, the petitioner explained that the relevant invoice was issued by the petitioner’s supplier, M/s. Kirthi Enterprises, but that they had wrongly indicated the GSTIN of the sister concern of the petitioner, namely, Premier Corporations. By stating that this reply was disregarded and the proposal to impose tax, interest and penalty was confirmed, this writ petition was filed.

3. Learned counsel for the petitioner invited my attention to invoice no.123 dated 20.09.2017 of Kirthi Enterprises. By further referring to the GSTR-1 return of Kirthi Enterprises, he pointed out that invoice no.123 was wrongly shown as having been issued to Premier Corporation. Since the availment of ITC was based on a genuine purchase by the petitioner from Kirthi Enterprises, learned counsel submits that the impugned order warrants interference.

4. Mr. T.N.C.Kaushik, learned Additional Government Pleader, accepts notice on behalf of the respondents. He submits that the petitioner should take recourse to rectification proceedings if the return was wrongly filed by the supplier.

5. The documents on record, such as invoice dated 20.09.2017 and the GSTR return of Kirthi Enterprises, prima facie indicate that the GSTIN of Premier Corporation was wrongly mentioned by Kirthi Enterprises in the return. If that is indeed the case, the petitioner would be unjustly deprived of ITC. In order to provide the petitioner with an opportunity to redress this grievance, interference with the impugned order is called for.

6. For reasons set out above, the impugned order dated 25.08.2023 is quashed and the matter is remanded to the assessing officer. The assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within a period of two months thereafter. It is also open to the petitioner to file an appropriate petition, if necessary, to set right the error complained of by the petitioner.

7. W.P.No.4523 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.4896 and 4898 of 2024 are closed.