2026-VIL-195-GSTAT-CTT
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SGST Tribunal

GST - Section 16(2)(c) read with Sections 41 and 42 of the CGST Act - Eligibility of input tax credit not reflected in GSTR-2A, Condition of payment of tax by the supplier - Credit availed in GSTR-3B exceeded the credit available in GSTR-2A - Show cause notice under Section 73 led to a confirmed demand - First Appellate Authority admitted additional credit on the basis of the reconciliation statement and updated GSTR-2A and sustained the balance - Appellant contended that non-population of invoices in GSTR-2A does not imply non-payment of tax by suppliers - Whether credit on invoices not populated in GSTR-2A can be denied under Section 16(2)(c) when the Appellant has not shown payment of tax by the suppliers - HELD - Section 16(2) lays down cumulative mandatory conditions, and clause (c) makes payment of the tax charged on the supply a condition for entitlement, subject to Section 41. Credit taken under Section 41 is merely provisional and not absolute and remains subject to the statutory conditions and restrictions. Section 42 allows the recipient to reduce the liability when the supplier subsequently declares the invoice - Though non-population of invoice details is not conclusive proof of non-payment of tax, the statute recognises non-disclosure as non-payment and disclosure as payment, so non-disclosure of invoice details in the prescribed manner means that tax has not been paid - The burden of proving eligibility lies on the claimant under Section 155. The Appellant admitted in its reconciliation statement that the invoices had not been uploaded by the suppliers and did not make any credible effort to prove payment of tax at the adjudication stage, the first appeal stage or before the Tribunal, so remand for a further opportunity is not justified - The communication of the discrepancy through scrutiny under Section 61 substantially met the requirement of communicating the unmatched credit. Omission of Section 42 does not alter the scheme, as the amended Section 41 provides for reversal and reclaim of credit with interest, and the earlier provision applies to the year in dispute - The demand of tax upheld in the order of the FAA is confirmed – The appeal is disposed of - Computation of interest on ineligible credit and levy of interest based on Rule 36(4) not proposed in the show cause notice - Interest was computed in the order of the FAA on the tax demand confirmed on unmatched credit and also on provisional credit availed in excess of the limit in Rule 36(4) - Appellant contended that Rule 36(4) has no legal backing in view of Section 41 and that the levy of interest was not indicated in the show cause notice, relying on Section 75(7) - Whether interest can be levied by applying Rule 36(4) and how the interest liability is to be computed - HELD - Rule 36(4) only places a limit on availing provisional credit in excess of the credit available in GSTR-2A and does not make the provisional credit absolute. Credit remains reversible in the event of non-payment of tax by the supplier, and interest is due from the date the credit is availed ineligibly to the date it is refunded by way of addition to the output liability or otherwise - Levy of interest on the amount of provisional credit availed in excess of the limit in Rule 36(4) was not contemplated in the show cause notice, and is outside the scope of the original adjudication - Interest under Section 42(8) is mandatory and incidental to recovery of ineligible credit, so Section 75(7) does not prevent its levy even if it was not proposed in the notice. Interest on the confirmed tax demand was not computed strictly as per Section 42(8), which requires invoice-level matching to specify the invoices not populated, the date of receipt and the input tax involved - The order relating to interest is set aside and remanded to the Adjudicating Officer for fresh computation strictly as per Section 42(8) after identifying the invoices not populated, the interest levied on the basis of Rule 36(4) is deleted.
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