2026-VIL-333-GSTAT-BLR
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  2. 2026-VIL-333-GSTAT-BLR

SGST Tribunal

GST - Dismissal of appeal for non-appearance - Section 107(11) and (12) of CGST Act, 2017 - Appellant's input tax credit was disallowed on the basis of the difference between Form GSTR-3B and Form GSTR-2A for FY 2018-19. The demand was confirmed in the adjudication order, and the FAA dismissed the appeal for non-prosecution since the Appellant did not appear on three dates fixed for personal hearing. The Appellant had filed a detailed appeal with its reply to the SCN, a reconciliation statement and the amendment table details. The FAA did not decide the grounds on merits - Whether the FAA is right in dismissing the appeal for failure to utilise the opportunity of personal hearings - HELD - Section 107(11) requires the FAA to pass an order confirming, modifying or annulling the order appealed against. Section 107(12) requires the order to state the points for determination, the decision thereon and the reasons for such decision. Even where the Appellant did not appear, the FAA should have given findings on the grounds of appeal and examined the supporting documents. A general statement that the Appellant did not adduce necessary documentary evidence cannot replace an examination of the documents and grounds already filed. The decisions on non-prosecution relied upon concern their own procedural settings and do not override the statutory duty to pass a reasoned decision on merits. The inherent power to dismiss for non-prosecution cannot be used where the statute requires the appeal to be decided on merits - The FAA could proceed after the default but could not dismiss the appeal solely for default of appearance. The conduct of the Appellant in not replying to the audit observations and not attending the hearings does not relieve the FAA of its duty - The order of the FAA is a non-speaking order in breach of Section 107(12) and cannot be sustained - The appeal is allowed - Denial of Input Tax Credit on mismatch between Form GSTR-3B and Form GSTR-2A - Section 16 of CGST Act, 2017 - Demand was confirmed on a comparison of the total credit availed in Form GSTR-3B with the total credit in the auto-drafted Form GSTR-2A for FY 2018-19, without invoice-wise details or identification of any condition of Section 16 that was violated. Appellant contended that no provision during the period barred credit not reflected in Form GSTR-2A - Whether the excess credit availed in Form GSTR-3B as compared to Form GSTR-2A can be disallowed as not available under Section 16 - HELD - Section 16(2) prescribes the conditions for credit, being possession of a tax invoice, receipt of goods or services, payment of tax to the Government and filing of return. The Appellant was not put on notice about any condition violated, and the demand was based only on the mismatch of total credit. A mismatch alone does not create a liability of tax and can only provide a basis for initiating verification proceedings. Where the mismatch arises from supplier default, the defaulting suppliers must be identified and their returns verified, which was not done. During the period there was no provision for denial of credit on account of a difference between the two Forms. The scheme of matching under Sections 38, 41 and 42 was never brought into operation, and Form GSTR-2A served only as a facility on the common portal. Rule 36(4) was inserted only with effect from October 2019. Form GSTR-2A is only a facilitator for taking an informed decision while doing self-assessment. The auto-drafted data may be the source for the officer to initiate examination and identify lapses from the supplier end. The Circular directs that the proper officer first seek invoice-wise details and then ascertain fulfilment of the conditions of Section 16. The Circular binds the officers, and its procedure for certificates is to be undertaken by the Appellant only after the details of defaulting suppliers are shared, which was not done - The demand confirmed on the comparison of total credit without invoice-level mismatch cannot be sustained - The appeal is allowed - Sufficiency of records to establish no excess credit - Reconciliation with amendment table of Form GSTR-2A - Adjudicating authority rejected the reconciliation by referring only to the B2B table of Form GSTR-2A for July 2019, and ignored the entries in the B2BA amendment table for the same month. Appellant contended that credit relating to nine invoices of one supplier, which were not reflected earlier, appeared in the updated Form GSTR-2A for FY 2018-19 through amendment - Whether the documents are sufficient to establish that there was no excess credit availed in Form GSTR-3B during the year - HELD - The amended invoices did not appear in Form GSTR-2A of the year as they were not reflected in the B2B table, and appeared on amendment through the outward supplies return of July 2019. The Appellant consistently submitted that the shortage was due to non-consideration of the B2BA amendment invoices. The authorised representative of the Respondent verified the updated Form GSTR-2A and Form GSTR-3B and confirmed that the total credit availed was within the total credit available. Form GSTR-3B of July 2019 shows that the credit of these invoices was not availed a second time. Had the adjudicating authority followed the Circular and called for invoice-wise details, the amendment entries would have come to light. Had the Appellant replied to the audit observations, the litigation could have been avoided - There was no excess availment of credit, and the demand confirmed in the adjudication order and upheld by the FAA is set aside - Interest and penalty on the demand of excess credit - Section 50 and Section 73(9) of CGST Act, 2017 - Interest and penalty were confirmed along with the demand of reversal of credit, and the Appellant sought in the alternative a waiver of interest for the period when filing before the Tribunal was unavailable - Whether interest and penalty survive and whether waiver of interest arises - HELD - As the demand of reversal of credit fails, the interest under Section 50 and the penalty under Section 73(9) also fall. As the tax demand does not survive, no interest is payable and the alternative plea for waiver of interest does not arise - The appeal is allowed, the adjudication order and the order of the FAA are set aside.
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