M/S N. R. Builders vs. Commissioner Of Commercial Taxes, Karnataka

Facts

The appellant, M/s N. R. Builders, challenged orders that disallowed Input Tax Credit (ITC) claimed in their GSTR-3B for FY 2018-19, citing a mismatch with the ITC auto-populated in GSTR-2A. The appellant contended that a portion of the disallowed ITC related to FY 2017-18 invoices claimed within the permissible window under Section 16(4) of the CGST Act. The appellant also argued that the Order-in-Original was vitiated by the absence of a personal hearing, as the Show Cause Notice marked the hearing as 'NA'. Furthermore, the appellant questioned the validity of proceedings initiated under Section 73 without a notice in FORM GST ASMT-10. The impugned orders were passed by the Commercial Tax Officer and upheld by the Joint Commissioner of Commercial Taxes (Appeals).

Held

The Court held that the difference between ITC claimed in GSTR-3B and reflected in GSTR-2A for FY 2018-19 cannot be treated as inadmissible without examining the appellant's explanation regarding FY 2017-18 invoices claimed within the Section 16(4) window. GSTR-2A was a facilitation tool, not a statutory bar, and CBIC Circular No. 183/15/2022-GST directs verification, not summary disallowance. The Court found that the Order-in-Original was vitiated by the absence of a personal hearing, as Section 75(4) makes a hearing mandatory when an adverse decision is contemplated, and the Show Cause Notice marked the hearing as 'NA'. The Court also held that the absence of a notice in FORM GST ASMT-10 does not, by itself, invalidate proceedings initiated under Section 73 following an audit reference, as Section 61 and Section 73 are independent provisions. The Court set aside the impugned orders and remanded the matter to the Proper Officer for de novo adjudication, directing specific verification of the appellant's reconciliation, invoice-wise, with reference to relevant documents and returns, and granting a proper opportunity of personal hearing. The Court clarified that it had not expressed any opinion on the ultimate admissibility of the disputed ITC, leaving all questions of fact open for determination.

Key Issues

1. Whether the difference between ITC claimed in GSTR-3B and ITC auto-populated in GSTR-2A for FY 2018-19 can be treated as inadmissible without examining the appellant's explanation that part of it relates to FY 2017-18 invoices claimed within the Section 16(4) window? The appellant argued that Section 16(4) allowed claiming FY 2017-18 invoices up to the due date of the March 2019 return, and GSTR-2A was a facilitation tool, not a statutory bar. CBIC Circular No. 183/15/2022-GST directs verification, not summary disallowance. The revenue did not present arguments on this issue. 2. Whether the Order-in-Original is vitiated by the absence of a personal hearing under Section 75(4)? The appellant contended that Section 75(4) mandates a personal hearing when an adverse decision is contemplated, and its absence vitiates the proceedings, citing Supreme Court and High Court decisions. The revenue did not present arguments on this issue. 3. Whether the absence of a notice in FORM GST ASMT-10 renders proceedings under Section 73 invalid? The appellant argued for the invalidity of proceedings without ASMT-10. The revenue argued that Section 61 and Section 73 are independent, and if proceedings are initiated directly under Section 73 following an audit reference, the absence of ASMT-10 does not invalidate them.