GST Tribunal Quashes ₹1.93 Lakh ITC Demand After Trader Shows FY 2018-19 Credit Was Claimed On Time in FY 2019-20

M/s Sarthak Traders appealed against an ex parte demand order for FY 2019–20, which treated the difference between ITC claimed in GSTR-3B and ITC reflected in GSTR-2A as excess credit.

The taxpayer maintained that ₹1,92,949.93 of the apparent excess represented FY 2018–19 credit omitted earlier and claimed in FY 2019–20 within the statutory time limit; she accepted and paid the separate output-tax difference of ₹7,572.44.

The First Appellate Authority dismissed the appeal, relying on CBIC Circular No. 183/15/2022-GST and the absence of CA or supplier certificates.

Before the Tribunal, the taxpayer provided invoice-wise reconciliation and supporting return records.

Sections 107(11) and 107(12) of the UPGST Act require the appellate authority to decide an appeal by a written, reasoned order stating the points for determination, decisions and reasons.

Section 113(1) empowers the Tribunal to remand a matter, while Sections 16(4) and 39(9), as applicable to the relevant period, govern the time for availing ITC and rectifying omissions.

The Tribunal relied on M/s Archita Tour and Travels v. State of U.P., M/s Purushottam Stores v. State of Bihar and M/s SFC Global Commodity Private Limited v. Union of India for the requirement that appellate authorities address appeal grounds and give reasons.

It also referred to the CBIC Press Release dated 18 October 2018 and M/s Diya Agencies v. State Tax Officer and M/s Suncraft Energy Private Limited v. Assistant Commissioner, State Tax in considering whether ITC may be denied solely because of a GSTR-2A/GSTR-3B mismatch.

The Tribunal treated Circular No. 183/15/2022-GST as limited to specified supplier-side mismatches for FY 2017–18 and FY 2018–19.

The First Appellate Authority had noted the return comparison but failed to determine the taxpayer’s central contention that FY 2018–19 credit had been carried into FY 2019–20; its order was therefore non-speaking and contrary to Section 107(12).

The Tribunal nevertheless decided the merits rather than remanding, because the relevant material was before it and the demand rested on the mismatch.

It found the circular inapplicable: the dispute concerned a recipient’s claim of earlier-year credit, not an alleged supplier reporting failure of the kind covered by the circular.

The invoice-wise reconciliation showed that ₹2,28,742.82 of FY 2018–19 credit was claimed in FY 2019–20 within the statutory time limit, and that the overall ITC claimed remained within the credit reflected in GSTR-2A across the two years.

Accordingly, the apparent excess resulted from comparing FY 2019–20 GSTR-3B only with FY 2019–20 GSTR-2A, without accounting for the earlier-year credit.

It left undisturbed the accepted and paid output-tax amount of ₹7,572.44, together with any attributable interest or penalty, and granted consequential relief, including refund of the appeal pre-deposit with interest under Section 115.

The appeal was allowed to that extent, with no order as to costs.