2026-VIL-73-GSTAT-BLR
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SGST Tribunal

GST - Denial of Input Tax Credit based on mismatch between GSTR-2A and GSTR-3B without proper verification, Scope of verification under Section 73 - Proceedings under Section 73 of the CGST Act on the ground of mismatch between ITC availed in GSTR-3B and in GSTR-2A - Appellant contended the reconciliation showed no excess under CGST and SGST and authorities failed to consider its reply and reconciliation - Whether a mismatch between GSTR-2A and GSTR-3B alone without verification of underlying transactions constitutes sufficient basis for denial of ITC - HELD - Initiation of proceedings on noticing discrepancy is justified as legitimate ground for scrutiny but existence of discrepancy is only beginning of enquiry not its end. Final liability must rest on proper examination of records and explanation furnished by registered person - The authorities below have proceeded merely on the assumption that difference in GSTR-2A, by itself, establishes that the supplier has not paid the tax, without any finding based on an enquiry into the concerned suppliers or their tax payments, and without properly examining the Appellant’s reconciliation - A difference between GSTR-2A and GSTR-3B may justify verification. It cannot, without more, be treated as conclusive proof that ITC has been wrongly availed - The impugned orders are set aside, and the matter is remanded to the Adjudicating Authority for fresh, reasoned adjudication in accordance with law - the appeal is disposed of by way of remand - Whether the reconciliation and the documentary material produced by the Appellant were properly considered by the authorities below – HELD - Neither the reconciliation furnished by the Appellant, nor the internal inconsistency between the two computations on record, has been properly considered by the authorities below. Moreover, the CGST/SGST working which FORM GST DRC-07 attributes to the Appellant’s reply does not correspond to that reply at all as the reply was confined to the IGST head. The demand cannot be sustained without first resolving this basic factual inconsistency, and without giving the Appellant a proper opportunity to meet a CGST/SGST demand that was never put to it in any notice - Whether Section 16(2)(c) has been correctly applied to the period involved in the present appeal – HELD - The authorities below have moved directly from the GSTR-2A difference to the conclusion that the supplier had not paid the tax, without any corresponding enquiry recorded in either order. The First Appellate Authority’s reliance on ALD Automotive Pvt. Ltd. does not answer this factual question as the said decision concerned the statutory conditions for availment of ITC in a limitation dispute, not the evidentiary value of a GSTR-2A mismatch - The authorities below have not established that the condition in Section 16(2)(c) was breached by the Appellant. Section 16(2)(aa) has no application to Financial Year 2019-20 - Whether CBIC Circular No. 183/15/2022-GST and Circular No. 193/05/2023-GST were correctly applied – HELD - The fact that the appellant did not furnish the certificates contemplated by these Circulars may well be relevant to the verification process the Circulars prescribe. It does not, however, dispense with the need to determine the actual ITC liability by reference to the substantive statutory provisions applicable to the relevant period - The Circulars No. 183/15/2022-GST dated 27.12.2022 and 193/05/2023-GST dated 17.07.2023 have not been applied with due regard to their respective periods of operation - Whether the interest and penalty confirmed against the Appellant can be sustained – HELD - In the present case, that tax liability has not itself been properly determined; the computation on which it was confirmed requires fresh verification, for the reasons recorded under the issues discussed above. It follows that the consequential interest and penalty cannot be sustained independently of that determination - Whether the impugned orders are reasoned, speaking orders as required under Section 75(6) of the CGST Act – HELD - Section 75(6) casts a mandatory obligation on the Proper Officer to set out the relevant facts and the basis of the decision in every order passed under Section 73 - The impugned orders do not contain adequate reasons for the computation and confirmation of the demand. They do not meet the requirement of a reasoned, speaking order under Section 75(6) of the CGST Act.
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