SC confirms that ITC can be claimed where invoices are not reflected in GSTR-2A for FY 17-18.
SUNCRAFT ENERGY PRIVATE LIMITED vs the Assistant Commissioner of State Tax, Ballygunge Charge
Fact of the case:
The department denied ITC of the appellant for FY 2017-18 under the provisions of West Bengal Goods and services Act 2017(WBGST Act) on the grounds that the invoices are not reflecting in the GSTR 2A of the appellant.
The department issued a notice of recovery of the ITC claimed U/S 73(10) without conducting any inquiry on the supplier and denied the ITC excess claimed under GSTR-3B by the appellant not reflected in GSTR-2A.
The appellant had paid the full amount, including taxes, to the supplier and therefore took Input Tax Credit (ITC) for the purchase. Challenging the said order the appellant filed a writ petition to the Hon’ble Calcutta High Court.
Observations:
To be eligible to avail ITC the conditions prescribed under subsection 2 of section 16 of the Act has to be fulfilled, of which all the conditions has been fulfilled by the appellant.
In support of this, council for appellant has placed reliance on the press release issued by CBIC dated 18.10.2018 clarifying that the furnishing of outward details in GSTR-1 & facility to view GSTR2A by the recipient does not impact the ability of taxpayer to avail ITC as per the provision of Section 16 of the Act.
Also, the press release dated 04.05.2018 clarifies that there should not be any automatic reversal of ITC by the buyer on non-payment of tax by the seller. In case of default the recovery shall be made from the seller, reversal of credit from buyer shall also be an option to the authorities in exceptional circumstances.
Further explained by Hon’ble Supreme Court in case of Union of India and Bharti Airtel Ltd the form GSTR-2A is only the facilitator for taking confirm decision while doing self-assessment.
Conclusion:
Hon’ble Calcutta High Court Held that:
Furnishing of outward details in form GSTR-1 by the supplier and facility to view the same in form GSTR-2A by the recipient is in the nature of taxpayer facilitation and does not impact the ability of taxpayer to avail ITC.
Further it was clarified that there should not be any automatic reversal of ITC on payment of tax by the seller, in case of default in payment of tax by seller the recovery shall be made from the seller. However reversal of credit from the buyer shall also be an option available with authorities to address exceptional situations.
Further-more Hon’ble Supreme court has also dismissed the SLP filed against the Calcutta HC order in exercise of its powers under Article 136 of the Constitution of India.
SW Point of View:While the Government has clarified that ITC should not be denied however, certain compliances / documents needs to be arranged by the recipient to substantiate their claim. Various High Courts have held that reversal of ITC should only be initiated once the authorities showcase that there have been efforts to collect tax from the supplier and taxpayers with bona fide reasons should not be denied claim of ITC solely on the ground invoices are not reported by the seller.
