Let us take the case of Tvl.Kavin HP Gas Gramin Vitrak vide Order No. W.P.(MD).Nos.7173 and 7174 of 2023 and W.M.P.(MD)Nos.6764 and 6765 of 2023 dated 24.11.2023 to understand the impact of the unavailability of Form GSTR-2 on the Input Tax Credit (ITC) reversal and the analysis of Section 16(4) regarding the time limit for belated ITC claims.
Technical Obstruction
Taxpayers faced difficulties in claiming ITC due to the absence of Form GSTR-2 on the GST portal.
The High Court held that the reversal of ITC for belated claims under Section 16(4) is not applicable, emphasizing that GSTR-3B filing is not meant for ITC claims.
Facts of the Case
The petitioner is engaged in the business of Petroleum Gases, who filed monthly returns.
Due to financial problems, they filed Form GSTR-3B physically to avail ITC as the Goods and Services Tax Network did not allow online filing for non-payment of taxes on outward supplies.
Department's reaction over ITC claim
The department denied ITC claimed for filing of belated GSTR-3B for the financial years 2017-2018 and 2018-2019.
Petitioner's Submission
The petitioner argued that GSTR-2 filing is required for ITC, but Goods and Services Tax Network had not provided the facility for GSTR-2, making eligible ITC impossible to claim.
Additionally, the petitioner challenges the retrospective treatment of GSTR-3B as GSTR-3, as declared by Notification No.49 of 2019 (Central Tax), dated 09.10.2019, asserting that it goes against constitutional principles.
Furthermore, the petitioner emphasizes that sales made to them were duly reported by suppliers through GSTR-1, and the corresponding tax was collected, but the unavailability of FORM GSTR-2 has impeded the petitioner's ability to claim the ITC. Despite accounting for purchases, crediting tax payments through invoices, and claiming ITC in their books of accounts, the petitioner argues that the delayed filing of FORM GSTR-3B under Section 16(4) of the TNGST Act should not lead to the reversal of input tax.
Court's Decision and Legal Standpoints
The court found the department's proceedings legally untenable when Form GSTR-2 is unavailable for electronic filing.
Practical difficulties with GSTN not permitting online GSTR-3B filing were acknowledged.
The court noted that if an option for filing incomplete GSTR-3B was available, the petitioner would have filed the ITC claim online within the prescribed time.
GST Council and Directions to Respondents
The court suggested the GST Council as the appropriate authority but directed the respondents to take steps to rectify the situation.
Pending rectification, the court ordered allowing manual returns, accepting belated returns if otherwise in order, and permitting ITC claims on outward supply/sales without prejudice.
Legal Precedents Cited
The court cited the judgment of the Punjab and Haryana High Court, allowing electronic or manual filing in case of portal issues.
Another judgment from the Madras High Court was referenced, highlighting that in the absence of an enabling mechanism, the assessee cannot be prejudiced by not granting ITC.
Click here for the Judgement
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