ITC cannot be denied when FORM GSTR-2 was not notified

[CA Bimal Jain]

The Hon’ble Madras High Court in the case of TVL. KAVIN HP GAS GRAMIN VITRAK, REPRESENTED BY PROPRIETOR PALANIYANDI ARUN VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE DEPUTY STATE TAX OFFICER-1 - 2023 (12) TMI 1051 - MADRAS HIGH COURT held that the Respondents without giving any opportunity to file the returns by notifying the Form GSTR-2, cannot expect the taxable person to file returns. Hence, the Respondents ought to allow the dealers to file returns manually and the writ petitions were allowed without any cost.

Facts:

Tvl. Kavin HP Gas Gramin Vitrak (“the Petitioner”) is engaged in business related to petroleum gases and other gaseous hydrocarbons. The Revenue Department (“the Respondent”) issued the Show Cause Notice (“Impugned Notice”) dated April 27, 2022, based on the scrutiny and verification of the FORM GSTR-3B which was filed in the Financial Year (“F.Y.”) 2017-18 and 2018-19 to show cause the reason of claiming belated Input Tax Credit (“ITC”). The Respondent was directed to remit and reverse the wrong claim of ITC on the purchase of petroleum products.

The Petitioner submitted that the FORM GSTR-3B were filed physically and contended that the sales made, and tax collected were duly reported by the supplier in GSTR-1. However, the Petitioner could not claim the ITC because FORM GSTR-2 was not notified. Also, the GST Portal did not permit the filling of FORM GSTR 3B online when the dealers did not

pay tax on outward supply/sales, due to which ITC could not be claimed online. Therefore, the Petitioner accounted the purchases and credited the payment made through the tax invoice, claimed ITC in books of accounts and availed the ITC through FORM GSTR-3B which was filed physically.

Further, the Respondent passed a non-speaking order dated August 16, 2022 (“the Impugned Order”) without considering the contentions of the Petitioner.

Hence, aggrieved by the Impugned Order the present writ petition was filed before the Hon’ble Madras High Court.

Issue:

Whether ITC can be claimed by submitting the physical FORM GSTR-3B returns when FORM GSTR-2 was not notified?

Held:

The Hon’ble Madras High Court in the case of TVL. KAVIN HP GAS GRAMIN VITRAK, REPRESENTED BY PROPRIETOR PALANIYANDI ARUN VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE DEPUTY STATE TAX OFFICER-1 - 2023 (12) TMI 1051 - MADRAS HIGH COURT held as under:

• Observe that, if the GSTN provided an option for filing GSTN without payment of tax or incomplete FORM GSTR-3B, the dealer would be eligible for claiming of ITC. The same was not provided in GSTN network hence, the dealers are restricted to claim ITC on the ground of non-filing of FORM GSTR-3B within prescribed time.
• Noted that, If the option of filing incomplete filing of FORM GSTR-3B is provided in the GSTN network the dealers would avail the claim and determine self-assessed ITC online. The Petitioner had expressed real practical difficulty. The GST Council may be the appropriate authority, but the Respondents ought to take steps to rectify the same. Until then the Respondents ought to allow the dealers to file returns manually.
• Relied on the judgment passed by Punjab and Haryana High Court in the case of HANS RAJ SONS VERSUS UNION OF INDIA AND OTHERS - 2019 (12) TMI 997 - PUNJAB AND HARYANA HIGH COURT, and ADFERT TECHNOLOGIES PVT. LTD. VERSUS UNION OF INDIA AND ORS. - 2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT​​​​​​​, wherein the Hon’ble Court held that the in absence of any enabling mechanism the assessee should not be denied from availing credit.

• Held that, the Respondents shall permit the petitioner to file manual returns whenever the petitioner is claiming ITC on the outward supply/sales without paying taxes. And directed the respondents to accept the belated returns and if the returns are otherwise in order and in accordance with law, the claim of ITC may be allowed. Hence, the Impugned Orders is quashed and the writ petition is allowed.

(Author can be reached at [email protected])