No Disallowance of ITC for wrong mention of GSTIN of Recipient in Form GSTR-1: Allahabad HC [Read Order]

A Division Bench of the Allahabad High Court held that Goods and Services Tax (GST) Input Tax Credit (ITC) should not be disallowed solely based on wrong mention of the GST Number of the recipient in Form GSTR-1. The matter pertains to M/s. Shree Krishna Traders contesting Section 74 proceedings initiated by the Revenue Department for the fiscal year 2017-2018.

The primary contention was the existence of disparities between Form GSTR-3B and Form GSTR-2A due to an erroneously entered GSTIN in Form GSTR-1. Aditya Pandey, counsel for the petitioner argued that, according to Circular guidelines, procedures stipulated in Para 4 of the Circular should have been followed in cases of an incorrect GSTIN. It was contended that the Impugned Order failed to consider these crucial procedures, leading to a plea for its annulment and a subsequent fresh decision. The key emphasis during the proceedings was placed on the acknowledgment that ITC disallowance is contingent upon the actions of the actual recipient’s tax authority.

Importantly, the court clarified that the allowance of ITC should not be dependent on the completion of the registered person’s tax authority action but should be pursued independently. The petitioner submitted that, “where the supplier has filed Form GSTR-1 as well as return in the Form of GSTR-3B for the tax period, but he has declared the supply with wrong GSTIN of the recipient in the Form of GSTR-1. In such cases, the difference in ITC claimed by the registered person in his return in Form of GSTR-3B and that available in Form GSTR-2A may be handled by following the procedure provided in para 4 of the circular.”

It was also added that, ”In addition, the proper officer of the actual recipient shall intimate the concerned jurisdictional tax authority of the registered person, whose GSTIN has been mentioned wrongly, that ITC on those transactions is required to be disallowed, if claimed by such recipients in their Form GSTR-3B. However, allowance of ITC to the actual recipient shall not depend on the completion of the action by the tax authority of such registered person, whose GSTIN has been mentioned wrongly, and such action will be pursued as an independent action.” Ankur Agarwal, counsel appearing for the respondent-state submitted that, “l has no objection to the aforesaid proposition and submits that the matter may be remitted to the authority concerned for decision afresh.”

It was thus held by the Division Bench of Chief Justice Pritinker Diwaker and Ashutosh Srivastava that, “In view of the fair statement made by Sri Ankur Agarwal, the impugned order dated 26.7.2023 is, hereby, set aside. The matter is remitted back to respondent no.2 to pass fresh orders within a period of one month from today, taking into consideration the circular as well as any other material relied upon by the petitioner in support of its case.

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