2026-VIL-320-GSTAT-HYD
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  2. 2026-VIL-320-GSTAT-HYD

SGST Tribunal

GST - Reversal of Input Tax Credit on Mismatch with Form GSTR-2A - Section 16(2)(c) of CGST Act, 2017 - The Appellant availed input tax credit in Form GSTR-3B for July 2017 to March 2018 in excess of the amount reflected in Form GSTR-2A - Show cause notice under Section 74 alleging breach of Section 16(2)(c) on the ground that the suppliers had neither reported the supplies nor paid the tax - The FAA affirmed the order after rejecting the amended B2B entries and the supplier certificates produced by the Appellant as not acceptable, without recording reasons - The Appellant contended that the orders are non-speaking, that the Circular No. 183/15/2022-GST binds the Respondent, and that proceedings under Section 74 are without jurisdiction in the absence of suppression - Whether the order directing reversal of input tax credit can be sustained where the amended B2B entry and supplier certificates, produced as per the Circular, were rejected by the FAA without reasoned findings - HELD - The Appellant has taken a preliminary objection that the Respondent cannot justify the demand on grounds that do not figure in the SCN. Raising additional grounds at the appellate stage that are not found in the show cause notice is against the principles of natural justice. The enquiry is confined to the case made in the notice, namely the condition in Section 16(2)(c) - The Circular was issued under Section 168(1), and its paragraph 6 extends its application to Financial Year 2017-18 cases where adjudication or appeal proceedings are pending, so it applies to the Respondent - The para 4 of the Circular requires the officer to first seek the details and then ascertain fulfilment of the conditions. The Respondent did not show that the AA or the FAA undertook this exercise - The discrepancy arose from an amendment in the supplier's return and from reporting of supplies against the erstwhile registration of the Appellant, which are supplier-side corrections. The amended B2B entry forms part of Form GSTR-2A generated from the supplier's own declaration and discloses the particulars of the invoice, so it has probative value. Without contrary material, the want of a copy of the invoice cannot sustain the reversal - Where the supplier-wise difference exceeds the prescribed threshold, the Circular requires a certificate of a Chartered Accountant or Cost Accountant bearing a UDIN, and otherwise a certificate from the supplier. The Appellant produced the certificates in the prescribed form. A certificate is itself the means of verification, and the Respondent could have verified the UDIN and the supplier's Form GSTR-3B but did not do so - The Circular does not require the certificate to state the wrong registration number and provides that allowance of credit to the actual recipient does not depend on action against the holder of the registration number wrongly mentioned - Section 155 places the burden of proof on the claimant, but once the material is on record, a bare denial that it is unverified, without verification or contrary material, does not displace it. A difference between Form GSTR-2A and Form GSTR-3B may justify verification but is not conclusive proof of wrong availment - The FAA order is non-speaking. The Appellant established the conditions in Section 16(2) for the credit covered by the amended B2B entry and the certificates, and the demand to that extent is not sustainable and set aside - The appeal filed by the taxpayer is partly allowed - Residual IGST without Certificate - Whether the remaining IGST shortfall can be charged to the Appellant - HELD - The Appellant produced no certificate or other evidence that the supplier paid the tax to the Government, so the burden under Section 155 is not discharged and the condition in Section 16(2)(c) is not shown to be satisfied. Having invoked the Circular as the means of establishing eligibility, the Appellant cannot rely on its prescribed mode of proof for one set of invoices and disclaim it for another, as that would amount to approbating and reprobating, and the conditions of a beneficial instrument apply uniformly to every invoice - The credit for the residual amount is not admissible - Invocation of Section 74, Interest and Penalty - Whether the invocation of Section 74 and the consequential levy of interest and penalty can be sustained - HELD - Section 74 applies only where credit is wrongly availed by reason of fraud, wilful misstatement or suppression of facts to evade tax, and the satisfaction of the proper officer on these ingredients is a jurisdictional requirement. The foundational facts for the inference must be evident from the notice itself, and mere employment of these words does not show application of mind. The notice stated only that the discrepancy would have remained unnoticed without departmental verification and that the Appellant appears to have suppressed the facts. Detection of a discrepancy by the Department is not evidence of suppression, and the word ‘appears’ records a suspicion and not a foundational fact - Mere omission to give correct information is not suppression unless deliberate, and availment of credit without due verification does not amount to suppression, as every transgression of Section 16(2) cannot invite Section 74 without clear evidence of fraud, wilful misstatement or suppression with intent to evade tax. Failure to produce evidence in defence cannot supply, after the notice, an ingredient of suppression that the notice did not disclose. The charge is not established and the notice under Section 74(1) is not sustainable - The tax on the residual credit alone is payable under Section 73, with interest if the credit was utilised and penalty to be computed by the proper officer, the balance demand along with the proceedings under Section 74 is set aside.
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