The Goods and Service Tax Appellate Tribunal (GSTAT) Lucknow Bench has dismissed a departmental appeal seeking to restore input tax credit (ITC) disallowance of ₹76,750.20. 

The bench of Santosh Kumar Srivastava (Judicial Member) and Arvind Kumar (Technical Member) observed that the tax department had not produced specific evidence showing that the purchases covered by that relief were fictitious or that the supplies had not been received.

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The dispute arose from ITC claims for the financial year 2019–20 on purchases from Edge Techunified Private Limited. The supplier’s GST registration was subsequently cancelled with retrospective effect from July 1, 2017. Following scrutiny, the adjudicating authority disallowed ITC of ₹3,14,326, along with applicable interest and penalty, through an order dated August 22, 2024.

On appeal, the First Appellate Authority examined the GST records relating to two invoices dated November 10 and December 30, 2019. It noted a subsequent amendment reflected on the GST portal and granted limited relief of ₹76,750.20. The balance of the disputed demand remained in place. The department then approached the Tribunal to challenge that limited relief.

The department contended that invoices issued by a supplier whose registration had been cancelled retrospectively could not support an ITC claim. It relied on the conditions for claiming credit under Section 16(2) of the CGST and UPGST Acts, Rule 36 of the CGST Rules, and the claimant’s burden of proof under Section 155.

It also argued that a later amendment to GST records, or the appearance of invoices in GSTR-2A or GSTR-2B, could not establish eligibility for credit. According to the department, there was no conclusive proof that the supplier had paid the tax charged on the invoices to the government. It sought restoration of the original disallowance, interest and penalty.

The taxpayer responded that the First Appellate Authority had considered the amended entries and had reduced the proposed ITC reversal only to that extent. It argued that retrospective cancellation of the supplier’s registration did not, by itself, prove that the underlying purchases were bogus or that the supplies were never received.

The Tribunal confined its examination to the ₹76,750.20 relief challenged by the department. It noted that the First Appellate Authority had not allowed the entire disputed credit; it had considered the relevant entries and granted relief only for a limited amount.

The Bench found no specific finding or evidence establishing that the transactions covered by that relief were sham, fictitious, or unsupported by actual receipt of supplies. Nor had the department identified a particular error in how the First Appellate Authority assessed the amended GST entries.

The department also referred to differences in figures appearing in GSTR-9 and GSTR-2A. The Tribunal held that a difference between return figures did not, on its own, establish that the specific credit of ₹76,750.20 was inadmissible. Addressing the taxpayer’s reliance on Section 75(7), it observed that a demand cannot be sustained on a ground materially different from the grounds on which the original proceedings were based.

On the department’s arguments under Sections 16(2) and 155, the Tribunal said the statutory ITC conditions must be examined against the facts and evidence relating to the particular transactions. In this appeal, the department had not brought sufficient specific material to show that the transactions were non-genuine or that the limited relief involved an error of fact or law.

The Tribunal dismissed the departmental appeal and upheld the First Appellate Authority’s order dated December 2, 2024. The ₹76,750.20 relief therefore stands, while the portion of the original demand that the First Appellate Authority had upheld was not disturbed by this ruling.

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