Recently, the Madras High Court in 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, addressed the technical obstruction faced by the taxpayers in claiming the Input Tax Credit (ITC) due to the non-availability of FORM GSTR-2 on the portal. The High Court held that the reversal of ITC for belated claim as per Section 16(4) of TNGST Act is not applicable, since the filing of GSTR3B is not meant for claim of input tax credit. Also, in the absence of any enabling mechanism, the taxpayers cannot be prejudiced by not granting ITC.

Facts of the Case:-  

• The petitioner is engaged in the business related to Petroleum Gases and other Gaseous Hydrocarbons and was promptly filing monthly returns.
• The Petitioner has filed FORM GSTR-3B physically for availing the ITC, as due to the financial crisis, they were not in a position to pay the taxes, as the GSTN portal did not allows taxpayer to file return in FORM GSTR-3B online for non-payment of taxes on outward supplies.
• The department upon scrutiny of FORM GSTR-3B for the financial years 2017-2018 and 2018-2019, denied the ITC claimed by the petitioner on the ground that the return for the aforesaid periods were filed belatedly.

Submission of the Petitioner:

• It was submitted that provisions of Section 38 of the GST Act read with Rule 60 of the TNGST Rules provides that FORM GSTR-2 has to be filed, for claiming the ITC. However, the GSTN had not provided the facility of GSTR-2 till now.
• Further, FORM GSTR-3B is meant for availing the ITC and not for claiming the same. The non-availability of prescribed Form GSTR-2 made it impossible to file for eligible ITC. Hence, the reversal of input tax due belatedly filing of FORM GSTR-3B under Section 16(4) of TNGST Act is inapplicable.
• Moreover, GSTR-3B is not at all returned as prescribed in Section 39 of the TNGST Act. As per Notification No.49 of 2019(Central Tax), dated 09.10.2019, the Government declared that the reconciliation statement GSTR-3B may be treated as GSTR-3 in retrospective manner and the same is not correct and the same is against the Constitution.
• Also, it was contended that the sales made to the petitioner and the tax collected from the petitioner were duly reported by other end supplier through their respective GSTR-1 and so they could not claim the same since Form GSTR-2 is not notified. Hence, the petitioner has accounted the purchases and credited the tax payment made through tax invoice, claimed ITC in the books of accounts and availed the same through GSTR-3B filed physically.

Held:-

• The basis of initiation of the proceedings by the department is itself not legally tenable, as when FORM GSTR-2 is not available, then electronical filing is not possible. The Taxpayer cannot be expected to file the Form electronically.
• Further, noting the real practical difficulty regarding GSTN not permitting to file GSTR-3B in online mode, where the dealers had not paid taxes on the outward supply / sales. The Court stated that if the option of filing the incomplete GSTR-3B are provided on the GSTN portal the petitioner would have filed the ITC claim online, within the prescribed time.
• The GST Council may be the appropriate authority but the respondents ought to take steps to rectify the same. Until then the respondents ought to allow the dealers to file returns manually.
• Reliance placed upon judgment of Punjab and Haryana High Court, in the case of Hans Raj Sons Vs. Union of India and others in CWP No.36396 of 2019, wherein Court has allowed the tax payer to file the return either electronically or manually, if the portal is not opening.
• Also, relied upon the judgment in the case of Adfert Technologies Private Limited Vs. Union of India and other, the Madras High Court that in the absence of any enabling mechanism, the assessee cannot be prejudiced by not granting ITC.

The Court directed the respondents to permit the petitioner to file manual returns, accept belated returns if otherwise in order, and allow the claim of ITC on outward supply/sales without prejudice due to the absence of an enabling mechanism. The impugned order was set aside, and the writ petitions were allowed.

To read the complete judgment 2023 Taxo.online 1425