2026-VIL-321-GSTAT-LCK
  1. Home
  2. 2026-VIL-321-GSTAT-LCK

SGST Tribunal

GST - Reversal of Input Tax Credit under Section 17(2) read with Rules 42 and 43 of the CGST Rules, 2017 - Respondent, trading in taxable goods and tax-exempt food products, had exempt outward supplies declared in the annual return, on the basis of which the proper officer presumed common inputs and confirmed a demand for proportionate reversal - FAA dropped the demand entirely on the strength of separate books, purchase ledgers and stock registers - Revenue contended that no verified demarcation criteria existed and that manual books could not bypass the formula - Whether the order of the FAA dropping the demand under Section 17(2) read with Rule 42 is sustainable - HELD - Section 17(2) restricts credit to the portion attributable to taxable supplies where inputs are used partly for taxable and partly for exempt supplies, and Rule 42 prescribes a formula based on the ratio of exempt turnover to total turnover - The FAA dropped a substantial demand without recording the actual values of exempt sales, taxable sales and common credit for the disputed period. The claim that no common credit was mixed was accepted at face value without any verified physical audit or examination of the separate stock registers. In a wholesale-cum-retail trading firm operating from a single principal place of business, shared overheads and common inputs ordinarily exist, and the FAA failed to verify whether credit on such shared channels was properly segregated - The order, resting on general assertions without clear numbers and calculations, is non-speaking and unquantified to the extent it drops the demand under Rule 42 - The portion of the order-in-appeal dropping the demand under Section 17(2) read with Rule 42 is set aside and the matter is remanded to the FAA for de novo adjudication – Ordered accordingly - Mismatch between ITC claimed in GSTR-3B and ITC reflected in GSTR-2A - Relief granted by the FAA under Circular No. 183/15/2022-GST - Respondent explained that a portion of the mismatch arose because the supplier had wrongly mapped valid transactions to a different GSTIN in its returns, and produced tax invoices, banking records and a supplier certificate - Whether the FAA was correct in extending the benefit of the Circular on the mismatched ITC - HELD - The Respondent fulfilled all the verification requirements under the Circular by producing valid tax invoices, banking records proving actual payment of consideration and a certificate from the supplier confirming that the tax was fully paid to the Government but inadvertently mapped to an incorrect GSTIN. The core requirements of Section 16(2)(c) of the Act being satisfied, the FAA correctly extended the benefit of the Circular. The Revenue cannot validly challenge a relaxation mechanism officially mandated by its own Board - The findings of the FAA on the GSTR-3B versus GSTR-2A mismatch and the sustained liability are upheld and the Revenue appeal is rejected - Revenue objection to ITC already disallowed by the FAA - Objection of the Revenue to ITC pertaining to purchase invoices of a particular supplier not reflected in GSTR-2A - Revenue contended that the supplier's certificate did not reconcile with its declared filings, making the credit unverified - Whether the objection of the Revenue on this ITC component is sustainable - HELD - A review of the order-in-appeal reveals that this specific credit was already disallowed and decided against the Respondent due to non-production of a reconciled transaction validation certificate. The issue having been decided in favour of the Revenue, there is nothing left for the Revenue to challenge on this point - The objection of the Revenue is without merit and is rejected.
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Tax Vista

Your Weekly Tax Recap

By Dr. G. Gokul Kishore

Weekly Summary

VIL Video

GST Adjudication & Appeals Reform
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Security-Code
New Code?

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Security-Code
New Code?

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?