The Goods and Services Tax Appellate Tribunal (GSTAT), State Bench, Bhopal, has declined to decide at the admission stage whether a substantial question of law arises in an appeal concerning the eligibility of Input Tax Credit (ITC) under Section 16(2) of the Central Goods and Services Tax (CGST) Act, 2017.
The bench of Upendra Kumar Singh (Judicial Member) and Sunil K. Das (Technical Member) directed that the appeal be heard together with the connected cross appeal, observing that both matters arise from the same dispute and involve overlapping issues.
The appeal was filed by the Assistant Commissioner challenging the manner in which the respondent had availed Input Tax Credit in relation to supplies received for a project. According to the Revenue, the respondent claimed ITC on the basis of delivery challans rather than tax invoices or debit notes, allegedly violating the mandatory conditions prescribed under Section 16(2) of the CGST Act.
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The department argued that ITC becomes available only after the last lot of raw material has actually been received at the recipient’s premises. It contended that the respondent had prematurely availed credit before completion of all deliveries, thereby failing to satisfy the statutory conditions governing availment of ITC. The department also relied upon Section 155 of the CGST Act and Rule 55(5) of the CGST Rules, asserting that the burden of establishing eligibility for credit rested upon the taxpayer.
During the hearing, the department submitted that the appeal raises a significant question of law regarding the interpretation of Section 16(2) of the CGST Act. According to the department, the central issue is whether ITC can be legally availed on the strength of delivery challans instead of the prescribed tax invoice or debit note when goods are received in multiple consignments.
The respondent opposed the department’s stand, maintaining that the credit had been availed strictly in accordance with the provisions of the CGST Act. It argued that the controversy is not confined to a pure question of law but also involves disputed questions of fact regarding the manner in which the supplies were received and the statutory conditions were fulfilled.
The department contended that the interpretation of Section 16(2) is incorrect and that the ITC was validly claimed.
The Tribunal noted that the respondent had also filed a separate appeal against the Revenue in respect of the same dispute. Since both appeals arise from identical facts and concern the same refund-related ITC issue, the Bench found it appropriate to hear them together.
The Bench further observed that the amount involved in the present appeal exceeds ₹50 lakh. Consequently, under Section 109(8) of the CGST Act, the matter is required to be heard by a Bench comprising one Judicial Member and one Technical Member.
Without expressing any opinion on the merits of the controversy or on whether a substantial question of law is involved, the GSTAT held that it would not decide that issue at the present stage. Instead, considering the existence of the connected cross appeal, the Tribunal directed that both matters be listed together for further proceedings before the same Bench.
The GSTAT listed the matter for 31 July 2026 for arguments on admission, leaving all substantive issues open for adjudication in the combined hearing.
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