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Your ITC Rights: Supplier Investigation First
Your GST Officer Must Investigate Your Supplier Before Denying Your ITC for GSTR Mismatches
Your GST Officer Must Investigate Your Supplier Before Denying Your ITC for GSTR Mismatches
In the case of "Suncraft energy Private Limited vs. the Assistant Commissioner, State Tax, Ballygunge Charge and Others," the Calcutta High Court clarified the rights of registered persons regarding Input Tax Credit (ITC) denials. If there's a discrepancy between GSTR-2A and GSTR-3B due to the supplier's omission in GSTR-1, the GST officer must first investigate the supplier before denying the recipient's ITC.
Navigating the complexities of GST, "Suncraft energy Private Limited" found themselves at the center of a pivotal case. They faced a show cause notice because of mismatches between GSTR-2A and GSTR-3B, stemming from their supplier's oversight in GSTR-1. This raised potential ITC denial concerns under Section 16(2) of the CGST Act.
The crux of their argument was straightforward: they had met all conditions under Section 16(2), including timely payment to the supplier and possessing a valid tax invoice. Despite this, the assistant commissioner contemplated reversing their availed ITC.
The Hon’ble High Court of Calcutta, in its judgment, set a clear precedent.
Before denying ITC to you, or any registered person, because of such discrepancies, the GST officer must first investigate the supplier. Only in rare cases, where there's evidence of collusion or if the supplier is untraceable or has ceased business operations, can he directly penalize the recipient.
For you, this ruling is a safeguard, emphasizing the importance of procedural fairness in GST regulations. It's a reminder that before any ITC denial, due diligence on the supplier's end is a must.
