Denial of ITC Based Solely on GSTR-2A Mismatch Held Invalid by Jharkhand HC

Case Details:
Case Title: Mukesh Kumar Singh v. The Commissioner, Jharkhand Goods and Service Tax & Anr.
Court: Jharkhand High Court, Ranchi
Petition No.: W.P. (T) No. 3141 of 2024
Date of Judgment: 24.01.2025
Category: Input Tax Credit
Relevant Sections: Sections 107(8) and 107(12) of the CGST Act, 2017

Facts of the Case

[Para 1–4]
The petitioner, a registered taxpayer under the Jharkhand GST Act, was issued an order dated 15.12.2020 by the Deputy Commissioner, Dhanbad (Respondent 2), alleging that he claimed excess Input Tax Credit (ITC) in GSTR-3B compared to GSTR-2A for FY 2018–19. The ITC claimed was ₹25,53,145.55. No notice was issued before this ex parte order.

[Para 5–6]
The petitioner filed an appeal on 26.03.2021, arguing that ITC cannot be denied merely due to mismatch with GSTR-2A if valid purchase documents exist. However, the Appellate Authority rejected the appeal on 28.02.2022 stating “no valid/lawful document submitted,” without seeking any hearing or document.

[Para 14–15]
The petitioner claimed that supporting documents were submitted with the appeal (as listed in Form GST APL-01, Serial No. 18), and no opportunity of hearing was granted.

Question(s) in Consideration

[Para 16]

1. Whether denial of ITC solely on the basis of mismatch between GSTR-2A and GSTR-3B is legally sustainable.

2. Whether the Appellate Authority complied with Section 107(8) and 107(12) of the CGST Act, 2017 by granting hearing and issuing a reasoned order.

Observation of the Court

[Para 17]
The petitioner had indeed uploaded documents, including a reply to ASMT-10 (ASMT-11), contrary to the department’s assertion that no reply was given.

[Para 18]
Section 107(8) mandates opportunity of hearing to the appellant, which was evidently not provided.

[Para 19]
Section 107(12) requires the appellate order to be reasoned and in writing, listing issues and decisions thereon. The appellate order dated 28.02.2022 failed to meet this standard.

Judgment of the Court

[Para 20–21]
The Court held that the actions of the primary and appellate authorities were in blatant violation of natural justice and statutory provisions. Both the orders (dated 15.12.2020 and 28.02.2022) were set aside. The matter was remitted to the 2nd Respondent (Deputy Commissioner) to issue a proper hearing notice, consider the documents and submissions, and pass a reasoned order.
The Court also imposed ₹25,000/- cost on the department to be paid within four weeks.

Between Fine Lines

• A mismatch in GSTR-2A vs GSTR-3B alone is not sufficient to deny ITC.

• Authorities must give a fair hearing before passing orders.

• Uploading documents in the appeal must be duly considered.

• Appellate orders must explain reasons and issues considered.

• Courts will not tolerate breach of procedural fairness and natural justice.

Summary of Referred Cases

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