The Goods and Services Tax Appellate Tribunal (GSTAT), State Bench at Lucknow, has held that a mismatch between input tax credit claimed in GSTR-3B and the credit reflected in GSTR-2A/GSTR-2B cannot, by itself, conclusively establish that the credit was wrongly availed.

The bench of  Narendra Kumar (Judicial Member) and Alok Chopra (Technical Member) emphasised that the discrepancy must be examined against invoices, books of account, supplier details, payment records and other evidence relating to the underlying transactions.

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The bench has noted that a Chartered Accountant’s certificate cannot be discarded merely because it was issued after the appeal was filed. Where the certificate concerns earlier transactions and can be correlated with contemporaneous records, it must be considered as corroborative evidence.

The appellant/assessee challenged the rejection of his first appeal concerning an ITC dispute for financial year 2017-18. The Tribunal’s order summary records the disputed tax amount as ₹13,12,968.

The original demand order was passed on December 26, 2023. The taxpayer maintained that the ITC claim arose from genuine business transactions supported by purchase invoices, books of account, payment proofs and reconciliation statements.

He submitted that medical difficulties had prevented him from appearing before the first appellate authority. According to him, the appeal was rejected primarily because of non-appearance and non-production of documents, without an adequate examination of the substantive entitlement to credit.

The taxpayer also argued that the authorities had failed to follow the verification procedure prescribed in CBIC Circular No. 183/15/2022-GST dated December 27, 2022, for differences between GSTR-3B and GSTR-2A relating to financial years 2017-18 and 2018-19.

The taxpayer contended that a numerical mismatch did not establish wrongful availment of ITC, particularly during the initial period of GST implementation. Such differences, he argued, could arise from suppliers’ reporting errors, delayed filings, incorrect GSTIN entries or other bona fide omissions.

He submitted that the Proper Officer had not adequately verified compliance with the conditions under Section 16(2) of the CGST Act, including possession of valid tax invoices, receipt of goods or services, payment to suppliers and payment of tax by the suppliers.

The taxpayer offered to furnish a detailed reconciliation of the credit claimed in GSTR-3B, the credit reflected in GSTR-2A and the entries recorded in his books, along with supplier certificates or CA/CMA certificates wherever applicable.

A principal point of dispute concerned a CA certificate dated July 14, 2026, produced during the Tribunal proceedings. The taxpayer argued that the certificate merely confirmed pre-existing facts concerning supplies, invoices and supplier tax payments for financial year 2017-18. Its later issuance did not change the underlying transactions.

The Department maintained that both the adjudicating authority and the first appellate authority had provided sufficient opportunities to the taxpayer to appear and submit the necessary documents.

It opposed taking the CA certificate on record because the document had been issued after the appeal was filed. The Department argued that its admission required consideration of the delay and the taxpayer’s justification for producing it at that stage.

The Department also submitted that the medical records related only to the last hearing before the first appellate authority and did not explain the taxpayer’s failure to attend earlier hearings. It therefore sought dismissal of the appeal.

The Tribunal found that, in the particular circumstances of the case, the taxpayer’s non-appearance could not be treated as sufficient reason to conclude the proceedings against him without considering the substantive dispute.

It took account of the explanation concerning medical difficulties and referred to the Supreme Court’s decision in G.P. Srivastava v. R.K. Raizada, concerning the assessment of sufficient cause for non-appearance.

The bench further found that the first appellate order did not adequately address the ITC controversy. The appellate authority was required to examine the material bearing on the tax liability and record reasons for its conclusions.

Accepting the medical certificate produced in support of the taxpayer’s explanation, the Tribunal proceeded to examine the case on its merits and the facts presented before it.

The Tribunal held that a difference between GSTR-3B and GSTR-2A/GSTR-2B undoubtedly required examination, but could not independently establish that the taxpayer had wrongly claimed credit.

The bench explained that the discrepancy had to be assessed in the context of the relevant invoices, accounts, supplier particulars, payment records and other transaction documents.

At the same time, it made clear that the statutory requirements under Section 16 continued to apply. Entitlement to ITC had to be determined from evidence relating to the actual supplies.

The ruling therefore required a fresh factual examination of the credit claim; it did not finally approve the disputed ITC.

Since the dispute concerned financial year 2017-18, the Tribunal considered the verification mechanism under CBIC Circular No. 183/15/2022-GST relevant, wherever applicable.

As reproduced in the judgment, the circular requires the Proper Officer to obtain details of invoices on which credit was claimed in GSTR-3B but which were not reflected in GSTR-2A. The officer must then verify possession of the prescribed documents, receipt of goods or services and payment of the supply value along with tax to the supplier.

The mechanism also addresses verification of whether the supplier paid tax on the supplies. Where the difference in respect of a supplier for the relevant financial year exceeds ₹5 lakh, the circular provides for a CA or CMA certificate confirming the supplies and payment of tax by the supplier through GSTR-3B. Such certificates must contain a Unique Document Identification Number.

Where the supplier-wise difference is up to ₹5 lakh, the circular provides for a certificate from the concerned supplier confirming the supplies and payment of tax.

The Tribunal noted that the circular extends to cases for the specified financial years in which adjudication or appellate proceedings remain pending.

Rejecting the objection based solely on the certificate’s issuance date, the Tribunal held that the CA certificate dated July 14, 2026, could be considered at the appellate stage.

The bench reasoned that a subsequently issued certificate could still relate to facts capable of verification against books, invoices, returns and other contemporaneous records.

It consequently treated the certificate as corroborative material to be evaluated with the supporting evidence. The date of issuance, by itself, did not make the document inadmissible.

This finding formed a specific part of the remand directions: the Proper Officer was instructed to consider the certificate produced before the Tribunal while examining the ITC claim.

The Tribunal also addressed the Department’s inability to upload its verification material and credentials on the GSTAT portal.

It recorded that the Department had examined the GSTR-3B and GSTR-2B position, but reported technical difficulties in uploading the verification results. The bench distinguished this situation from a complete absence of departmental verification.

The order noted that the Department had repeatedly been advised to complete the necessary portal mapping and upload the required documents, including authorisation to appear before the Tribunal. The Registry had also communicated with the State Tax Commissioner.

However, the difficulty remained unresolved when the judgment was pronounced on October 6, 2026. The Tribunal held that the proceedings could not remain pending indefinitely and that a decision had to be taken on the merits.

The Tribunal set aside the challenged adjudication and first appellate orders, together with the consequential demand of tax, interest and penalty arising from the disputed ITC. It directed the Proper Officer to examine the supporting documents afresh and determine the tax amount in accordance with law.

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