Mismatch of GSTR-2A / GSTR-2B – Whether Input Tax Credit (ITC) can be denied? Legal exceptions

Mismatch of GSTR-2A / GSTR-2B – Whether Input Tax Credit (ITC) Can Be Denied?

Input Tax Credit (ITC) is the backbone of the GST system. However, denial of ITC due to a mismatch between GSTR-2A / GSTR-2B and GSTR-3B has become one of the most litigated GST issues in India.

The key legal question is:

• Can ITC be denied to a genuine recipient merely because the supplier failed to upload or correctly report invoices?

What are GSTR-2A and GSTR-2B?

GSTR-2A

• Dynamic auto-generated statement
• Based on the supplier’s GSTR-1
• Changes whenever the supplier amends data

GSTR-2B

• Static monthly statement
• Introduced for ITC certainty
• Does not change once generated

Important: Neither GSTR-2A nor GSTR-2B is a return prescribed under the CGST Act, 2017.

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Relevant Legal Provisions Under GST

Section 16(2) of the CGST Act, 2017

ITC shall be available if:

1. The recipient possesses a valid tax invoice
2. Goods or services are actually received
3. Tax has been paid to the Government
4. Return under Section 39 is furnished

Notably: Section 16 does NOT mandate reflection of invoice in GSTR-2A or GSTR-2B.

Rule 36(4) of CGST Rules

Rule 36(4) restricts provisional ITC but being a procedural rule, it cannot override Section 16 of the Act.

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Legal Position on ITC Mismatch – Practical Scenarios

1. Invoice Not Reflected in GSTR-2A / 2B but Tax Paid

Legal Position: ITC cannot be denied merely due to non-reflection if tax is actually paid.

Judicial View: GSTR-2A/2B is only a facilitation tool, not a statutory condition.

Status: ✅ ITC Allowed

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2. Supplier Filed GSTR-1 Late or With Errors

Recipient has no control over supplier’s filing behaviour.

Court View: A bona fide purchaser cannot be punished for the seller’s default.

Status: ✅ ITC Cannot Be Denied

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3. Supplier Collected Tax but Did Not Pay to the Government

Department Argument: Section 16(2)(c)

Judicial Clarification: Recovery must first be initiated against the supplier.

Status: ❌ Direct ITC denial not permissible

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4. Mechanical Denial Based Only on 2A / 2B Comparison

Such denial violates principles of natural justice.

Status: ❌ Illegal and unsustainable

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Landmark High Court Judgments

• D.Y. Beathel Enterprises (Madras HC) – Recovery must be from supplier first
• Suncraft Energy (Calcutta HC) – 2A mismatch alone insufficient
• Quest Merchandising (Delhi HC) – Buyer not liable for seller default
• AAP & Co. (Gujarat HC) – Mechanical ITC denial invalid

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CBIC Clarification

Circular No. 183/15/2022-GST clarifies that ITC cannot be denied without proper verification of supplier’s tax payment.

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Burden of Proof

Recipient Must Prove

• Valid tax invoice
• Receipt of goods/services
• Payment to supplier
• GSTR-3B filing

Department Must Prove

• Tax not paid by supplier
• Fraud or collusion

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Final Conclusion

Mismatch of GSTR-2A / GSTR-2B alone is NOT a valid ground for denial of ITC.

Unless fraud or fake invoicing is established, ITC remains a statutory right of the recipient.