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HC Held that ITC can not be denied for difference between 2A and 3B

Hon'ble Calcutta High Court has decided in case of Suncraft Energy Private Limited and Another that ITC can not be denied to the Assessee (purchaser) only on the ground that such bills are not reflecting in GSTR-2A. Copy of Order is also attached in last of the article.


Analysis of Hon'ble HC Decision


Hon'ble HC while deciding the case, has referred the press release dated 18.10.2018 issued by CBIC where in it was conveyed that 2A was a tax payer facilitation measure. Further, Court has held that Department on first hand need to proceed against Supplier and recover the tax dues. Only in exceptional circumstances where there has been collusion between the Purchaser and the Supplier or where the Supplier is missing or the Supplier has closed down its business or the Supplier does not have any assets and such other contingencies, Department can proceed against the Purchaser.


Basis of Decision (as per our interpretation of the decision)

  1. There was no specific provision regarding reflection of invoice in 2A in Section 16. Only condition is that Tax Should be paid by the Supplier. Further, CBIC press release also mentioned that 2A is just a tax facilitation measure.

  2. Appellant, has referred the decision of Hon'ble Delhi HC in case of Arise India Limited and Ors. Versus Commissioner of Trade and Taxes, Delhi and Ors in pertaining to similar provisions (more specifically section 9(2)(g) in D-Vat Act. SLP by the Department against the decision was also dismissed by the Hon'ble Supreme Court, thereby attains finality. In the said decision, Hon'ble HC (as quoted in the judgement) has held that:

the department is precluded from invoking Section 9(2)(g) of DVAT Act to deny the ITC to the purchasing dealer who had bona fide entered into a purchase transaction with the registered selling dealer who had issued a tax invoice reflecting the TIN number and in the event that the selling dealer has failed to deposit the tax collected by him from the purchasing dealer, the remedy for the department would be to proceed against a defaulting selling dealer to recover such tax and not denying the purchasing dealer the ITC. It was further held that where however, the department is able to come across material to show that the purchasing dealer and the selling dealer acted in collusion then the department can proceed under Section 40A of the DVAT Act.


Now Question arise about post 01.01.2022 when there is specific provision for 2B in Section 16 to avail the ITC


In our opinion, with the help of this order, Purchaser may not get the relief as this decision has not addressed the issue. However, as Hon'ble Delhi HC (which was also affirmed by the Hon'ble SC), gave relief as constitutional remedy to the innocent Purchaser even if there was similar specific provision in Delhi VAT Act. Relief was given on the ground that Department can not treat both guilty purchaser (where he is working in collusion) and bona fide purchaser as same as it will hit Article 14 of the Constitution (treats unequal as equal). On the same grounds, we are hopeful that innocent Purchasers may get relief in GST also through Courts . However, this will only be clear in due course of time.


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Hon'ble Calcutta HC on ITC
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Disclaimer: We have taken due care while analysing/interpreting decision of Hon’ble Court for academic purpose, however Fab Gyan will not be responsible for any mistake .

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