The Hon’ble Kerala High Court, in the case of M/s. Goparaj Gopalkrishnan Pillai v. State Tax Officer, Thripunithura & Ors. [WP(C) 29855 of 2023 dated October 5, 2023] allowed the writ petition and held that the Input Tax Credit (“ITC”) should not be denied on the ground that GST paid is not reflected in Form GSTR-2A due to non-remittance by Supplier. Therefore, the High Court set aside the Assessment Order to the extent of denial of ITC and directed the Revenue Department to examine the evidence placed on record by the assessee and pass fresh orders accordingly.

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M/s. Goparaj Gopalkrishnan Pillai (“the Petitioner”) is a registered dealer under the GST Act, 2017 and was alleged by the Revenue Department (“the Respondent”) that ITC as per Form GSTR-2A was Rs.65,39,776/-whereas the ITC availed and utilised as per Form GSTR-3B was Rs.98,44,815/-, therefore,  the Petitioner has availed and utilised excess ITC of Rs.33,05,038/- for the Financial Year (“FY”) 2017-2018. The Respondent issued Show Cause Notice dated August 26, 2022 (“SCN”) to the Respondent for which response was filed by the Petitioner stating that, the Petitioner had mistakenly entered the GST amount of Rs.36,47,624.24/- instead of Rs. 3,64,724.24/- in GSTR-3B of December, 2017 and has not utilised ITC till date. The excess ITC of Rs. 22,922/- was deducted in GSTR-3B of August 2018.

Thereafter, the Revenue Department vide Assessment Order dated November 17, 2022 (“the Impugned Order”) rejected the claim of ITC of the Petitioner on the ground that supplier/dealer has neither remitted the tax collected on supply of goods to the Government nor uploaded the details of the supply in Form GSTR-1 on the portal and held that the Petitioner was not entitled to avail ITC on supplies for which the supplier has not remitted the tax collected to the Government. Therefore, the excess ITC of Rs.19,830/-, availed was disallowed and Interest and penalty of Rs. 12,742/- and Rs. 20,000/- were imposed respectively. Thus, the Respondent directed the Petitioner to pay the total amount of Rs. 52,572/-.

Aggrieved by the Impugned Order, the Petitioner filed an appeal before the Hon’ble Kerala High Court for setting aside the Impugned Order and SCN.


Whether GST paid by the recipient but not remitted by the Supplier to the Government is ground for denying ITC?


The Kerala High Court in WP(C) 29855 of 2023 held as under:

  • Relying upon the judgement of the Hon’ble Kerala High Court in the case of M/s. Diya Agencies v. State Tax Officer [WP (C) 29769/2023 dated September 12, 2023], the High Court noted that, the amount of GST paid, not reflected in Form GSTR-2A should not be the sole basis for denial of the claim for ITC when there is evidence on record to prove that the claim of ITC is bonafide and genuine.
  • Held that, the Impugned Order to the extent of denial of ITC of Rs.19,830/- was set aside, hence the Writ Petition is allowed.
  • Directed that, the matter be remanded back to Respondent for the purpose of examination of the evidence and documents submitted by the Petitioner for claiming ITC. Thereby, the Petitioner should be allowed to avail ITC denied if the Respondent Officer is satisfied that the ITC claim is bonafide and genuine.
  • Further directed that, the Petitioner shall appear before the Respondent Officer with evidence to support his claim for ITC and fresh orders be passed by the Respondent Officer after examination of Evidence, in accordance with law.

Our View

This judgment is significant as it clarifies that the purchaser’s right to ITC is not dependent on the supplier’s compliance with the GST law. This will provide relief to taxpayers who have paid GST to their suppliers in good faith, but have not received ITC due to the supplier’s failure to remit the tax to the government.

However, it is important to note that the taxpayer must still be able to prove that they have actually paid the GST to the supplier. This can be done by providing documentary evidence such as invoices, bank statements, and payment receipts.

If the taxpayer is unable to provide such evidence, the revenue department may deny the ITC claim.

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