The Goods and Services Tax Appellate Tribunal (GSTAT), Patna State Bench, has admitted an appeal raising the question of whether a taxpayer’s reduction of output tax liability under Section 34 of the Central Goods and Services Tax Act, 2017, for FY 2019–20 can be denied because the recipients have not reversed their input tax credit (ITC).

The Bench of Manoj Shankar (Judicial Member) and Sanjay Kumar Mawandia (Technical Member) directed the respondents to submit their reply or cross-objections, if any, within six weeks and fixed the matter for hearing on November 25, 2026. 

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The appeal challenges the treatment of the taxpayer’s claim by the First Appellate Authority. According to the submissions recorded in the tribunal’s order, the authority denied the taxpayer’s claim solely because the recipients had not reversed their ITC.

The admission order describes the appellant’s grievance as a denial of input tax credit. However, the legal question expressly framed by the tribunal concerns reduction of output tax liability under Section 34 for FY 2019–20.

The brief order does not disclose the disputed tax amount, the underlying transactions, the details of any credit notes or the full reasoning of the First Appellate Authority. 

The matter was taken up for a virtual hearing through Webex. Advocate Dhruv Tiwari, appearing for the appellant, submitted that the First Appellate Authority had denied the claim only on the ground that the recipients had not reversed their ITC.

He argued that Section 34 of the CGST Act, 2017, contained no such mandate in the prescribed provision. On that basis, he submitted that the appeal involved a question of law and should be admitted for consideration on its merits.

These submissions represent the appellant’s position. The tribunal has not yet accepted or rejected that interpretation of Section 34. 

After examining the case record and hearing the appellant’s submissions, the bench found that the appeal involved a legal issue concerning whether reduction of output tax liability under Section 34 for FY 2019–20 could be denied for non-reversal of ITC by the recipients.

The question places the relationship between the taxpayer’s claim for reduction of output tax liability and the recipients’ treatment of their input tax credit before the tribunal.

The bench consequently directed that the appeal would be heard by the Division Bench and admitted it for further proceedings. 

Following admission, the tribunal ordered issuance of notice to the respondents, allowing them six weeks to furnish a reply or cross-objections, if any.

The appeal has been listed for hearing on November 25, 2026, when the dispute will proceed to further consideration. The admission order does not record any substantive arguments on behalf of the respondents. 

The September 30 order is a procedural admission order. It does not hold that recipient ITC reversal is unnecessary, allow the taxpayer’s claim for reduction of output tax liability or set aside the First Appellate Authority’s decision.

Its significance lies in the tribunal’s identification of the issue as a question of law warranting consideration by the Division Bench. The merits of the appellant’s interpretation of Section 34 remain to be decided. 

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