Input Tax Credit Denial Set Aside Due to Valid Supplier Certificates under Circular

Case Details:
Case Title: M/s Bhagwan Das Agrahari v. State of U.P. & Others
Court: High Court of Judicature at Allahabad
Petition Number: Writ Tax No. 1403 of 2024
Category of Dispute: Input Tax Credit
Date of Judgment: 24.01.2025
Relevant Section: Section 73, UPGST Act, 2017
Relevant Circular: Circular dated 27.12.2022 clarifying treatment of mismatches between GSTR-3B and GSTR-2A

Facts of the Case

[Para 1–5]
The petitioner, M/s Bhagwan Das Agrahari, was subjected to proceedings under Section 73 of the UPGST Act on the allegation of wrongful availment of Input Tax Credit (ITC). Though the petitioner filed an appeal, the same was dismissed without considering key documents.
[Para 5–6]
In support of the genuineness of transactions, the petitioner submitted supplier certificates as permitted under Circular dated 27.12.2022 (Govt. Order). These were said to fulfill the prescribed conditions for supplies below ₹5 lakhs.
[Para 6]
However, the authorities rejected the claim alleging that GSTNs were not mentioned in the certificates.

Question(s) in Consideration

[Para 7]
Whether the denial of ITC based on alleged absence of GSTIN in supplier certificates—despite compliance with Circular dated 27.12.2022—was legally tenable.

Observations of the Court

[Para 8–9]
The Court noted that the certificates submitted by the petitioner indeed contained GSTINs, contrary to what the respondent authority recorded.
[Para 8–10]
It acknowledged that the circular dated 27.12.2022 permitted certification by suppliers or Chartered Accountants in cases where supplies were below ₹5 lakhs, and the petitioner had complied with this.
[Para 10]
Thus, it held that the matter deserved reconsideration in light of the valid documents submitted.

Judgement of the Court

[Para 11–13]
The impugned orders dated 14.03.2023 and 01.05.2024 were quashed. The case was remanded to the original authority for fresh consideration within three months. Any amount deposited would abide by the fresh decision.
The petitioner was directed to submit a certified copy of the order within ten days.

Between Fine Lines

1. If supplier certificates are submitted in accordance with government circulars, they cannot be rejected without cogent reasoning.

2. GSTINs being present in such certificates is crucial in determining genuineness.

3. Authorities must verify content before forming conclusions on admissibility of ITC.

4. The Court emphasized procedural fairness and mandated reconsideration.

5. This judgment reinforces reliance on supplier certification for small-value purchases.

Summary of Referred Cases

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