M/s. Henna Medicals vs. State Tax Office, Thalassery & Ors. [WP (C) 30660 of 2023 dated September 19, 2023]

In the matter of M/s. Henna Medicals, the Hon’ble Kerala High Court rendered a decision by granting the writ petition, ruling that the discrepancy between GSTR 2A and GSTR 3B is not a reason to reject an application for Input Tax Credit (“ITC”). As a result, the Revenue Department was instructed to review the documentation submitted by the assessee and issue new orders in accordance with the findings.

Facts of the case

M/s. Henna Medicals (“the Petitioner”) claimed ITC on Goods and Services Tax (“GST”) paid was rejected by the Revenue Department (“the Respondent”) on the ground that there was a difference between GSTR 2A and GSTR 3B vide Order dated December 28, 2021 and Recovery Notice dated September 2, 2023. (“the Impugned Order”)

Aggrieved by the Impugned Order, the Petitioner filed a writ petition praying for setting aside the Impugned Order and claiming ITC for Rs.2,58,116/- along with interest and penalty. The total amount comes to approximately Rs.4,58,156/-.

Held

The Honourable Kerala High Court held, on the basis of the ruling rendered by the Honourable Supreme Court in the State of Karnataka v. M/s Ecom Gill Coffee Trading Private Limited case [Civil Appeal No. 230 of 2023 dated March 13, 2023], Moreover, the Hon’ble Calcutta High Court’s ruling in M/s Suncraft Energy Private Limited and Others vs. The Assistant Commissioner, State Tax, Ballygunge Charge [MAT 1218 of 2023 dated August 2, 2023] noted that the ITC claim should not be rejected based solely on the distinction between GSTR 2A and GSTR 3B.

The Hon’ble Kerala High Court further noted, citing its ruling in M/s Diya Agencies vs. State Tax Officer [WP (C) 29769/2023 dated September 12, 2023], that the distinction between GSTR 2A and GSTR 3B should not be the only reason an ITC claim is denied when there is documentation available to support the claim’s validity. Consequently, instructed the Assessing Authority to provide the assessee with a chance to present proof in favour of his ITC claim.

Directed that, the matter be remitted back to Respondent for the purpose of examination of the evidence of the Petitioner for claiming ITC and after examination of evidence, the Respondent passes fresh orders in accordance with law.

Additionally, it is directed that the Petitioner present himself to the Respondent Officer with all the proof necessary to substantiate his ITC claim.

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