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ITC Shielded from GST -2A Scrutiny

GST ITC Shielded

The Supreme Court has just given a significant nod to taxpayers, dismissing the Department's Special Leave Petition against the Calcutta High Court's ruling in the case of Assistant Commissioner Of State Tax Vs Suncraft Energy Private Limited & Ors.

Why It's a Game-Changer?

The Calcutta High Court made it crystal clear: Your Input Tax Credit (ITC) won't be denied just because it's not reflected in your GST -2A.

No ITC Reversal on Seller's Non-Payment:

The court emphasized that there shall be no automatic reversal of input tax credit(ITC) from the buyer in the event of non-payment of tax by the seller.

Recovery from Seller in Case of Default:

In the event of the seller defaulting on tax payments, the ruling ensures that the recovery will be made directly from them.

GSTR-2A: A Tool for Your Convenience:

Reliance was placed on the press release that clarified that GSTR-2A is just for the Taxpayer's convenience and cannot be a base for denying ITC.

This landmark judgment shields against multiple show-cause notices on the same matter. A potential money-saver for honest taxpayers!

The matter was regarding the reversal of input tax credit (ITC) availed by the appellant under the West Bengal Goods and Services Tax Act, 2017 (WBGST Act). The Assistant Commissioner of State Tax had reversed the ITC based on discrepancies noted in the GSTR 2A of the appellant for the Financial Year 2017-18.

The respondent, a recipient of goods and services, faced recovery notices from the tax authorities without any prior action against the supplier. The respondent contended that they fulfilled all conditions under Section 16(2) of the Act, including possessing a valid tax invoice, receiving goods or services, paying the tax to the supplier, and filing the required returns.

The show-cause notices issued and subsequent proceedings led to a demand for payment of tax, interest, and penalty. Challenging this, the respondent filed an appeal.

Upon appeal, the High Court took cognizance of Section 16(2) of the Act, emphasizing the conditions a dealer must fulfil to avail credit of any input tax. The court ruled that the demand raised on the appellant was not sustainable, considering the clarification in a press release that furnishing outward details and viewing them in GSTR-2A is for taxpayer facilitation and doesn't impact the ability to avail ITC. The court also said that there shall not be any automatic reversal of input tax credit from the buyer on non-payment of tax by seller.

The court further highlighted that actions against the buyer, in this case, the appellant, should only follow exceptional circumstances, such as collusion or the supplier being untraceable.

In essence, the judgment offers protection to taxpayers, ensuring a fair and reasonable approach to the availing of the input tax credit. 

This ruling not only provides relief to the appellant in question but also sets a precedent that can potentially safeguard the interests of numerous honest taxpayers facing similar challenges. It reinforces the principles of fairness and justice in the taxation system.


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