If the taxpayer is able to prove that tax amount is paid to the seller and the ITC claim is bonafide, ITC cannot be denied merely on non-reflection in GSTR-2A: Kerala High Court

 

Kerala HC has recently held that the non-deposit of GST by sellers – Buyers should not be penalized for issues beyond their control.

It was in the case of Diya Agencies Vs State Tax Officer that the Petitioner was denied ITC merely on the basis of non-appearance of the invoice in GSTR-2A, irrespective of fulfilment of other conditions for availing ITC.

The Court considered the CBIC press release dated 18th Oct 2018 which clarified that GSTR-2A is in the nature of facilitation and does not impact the ability of the taxpayer to avail ITC on self-assessment basis as per Section 16 of CGST Act.

 The court held that if the taxpayer is able to prove that tax amount is paid to the seller and the ITC claim is bonafide, ITC cannot be denied merely on non-reflection in GSTR-2A.

This judgement pertains to FY 2017-18 wherein the conditions in Section 16(2) did not specifically provide for invoice to appear in GSTR-2A.

Also, this was a period when the returns mechanism was not established properly.

The question remains now as to whether this judgement be used for subsequent years after 1st Jan 2022, when ITC on the basis of GSTR-2A was made compulsory?

 Time will tell as to how the court opines on this front.