GSTAT Lucknow held that a mismatch between GSTR-3B and GSTR-2A alone cannot disallow ITC; physical verification and supplier evidence must be considered.
GSTR-3B and GSTR-2A Difference Cannot Alone Disallow ITC
The GST Appellate Tribunal, Lucknow (GSTAT), ruled that a mere discrepancy between a taxpayer’s GSTR-3B return and the corresponding GSTR-2A data cannot be the sole basis for denying input tax credit (ITC). The Tribunal set aside orders that denied ITC solely on automated mismatch reports.
The tribunal directed the department to conduct proper reconciliation, consider certificates from suppliers, verify reverse charge mechanism (RCM) credits, and allow a fresh hearing. It emphasized that tax assessment must not be reduced to algorithmic enforcement without human oversight or opportunity to explain.
Mechanical denial of credit based on digital mismatches, without verifying underlying transactions or allowing explanation, violates principles of natural justice and Section 42 of the CGST Act.
This decision underscores the need for evidentiary scrutiny before disallowing ITC. Practitioners should cite this ruling when challenging disproportionate notices under automated GST systems, reinforcing the right to a meaningful hearing.
