Input tax credit cannot be denied for GSTR-2A mismatches caused by technical portal glitches.

By | July 16, 2026
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Input tax credit cannot be denied for GSTR-2A mismatches caused by technical portal glitches.

Input tax credit cannot be denied for GSTR-2A mismatches caused by technical portal glitches.

Issue

Whether an input tax credit (ITC) claim can be denied and subjected to interest and a 100% penalty solely because the underlying supplies are not reflected in Form GSTR-2A due to technical glitches on the GST portal.

Facts

  • The petitioner availed input tax credit based on valid invoices for the tax period 2017-18.

  • The corresponding supplies were not reflected in the petitioner’s Form GSTR-2A because the suppliers faced technical glitches on the portal.

  • The tax authorities issued an order denying the ITC, imposing the tax amount along with 18% interest and a 100% penalty under section 74.

  • The petitioner challenged this denial, highlighting that the actual receipt of supplies and payment of taxes were legitimate despite the portal mismatch.

Decision

  • Held, matter remanded: The issue was decided in favor of the assessee for statistical purposes, and the impugned demand order was quashed.

  • Glitches Formally Acknowledged: The court noted that portal and GSTR-2A technical glitches for the initial years of GST implementation are formally recognized by the government under Circular No. 183/15/2022-GST.

  • Interest and Penalty Waived Upon Verification: If the assessee satisfies the core statutory conditions for availing credit under section 16, the imposition of interest and penalty is completely unjustifiable.

  • Conditional Remand: The matter is remitted to the adjudicating authority to verify the claims using the mechanism prescribed in Circular No. 183. If entitlement is established, no interest or penalty will apply; if the petitioner fails to prove actual receipt or supplier payment, the demands will stand appropriated.

Key Takeaways

  • Circular No. 183 is Mandatory: For structural mismatches between GSTR-2A and GSTR-3B during the transitional years of GST (2017-18 and 2018-19), authorities must mandatorily follow the relaxation and verification procedures laid out in Circular No. 183.

  • Substantive Compliance Over Portal Errors: The electronic reflection of an invoice in GSTR-2A is a facilitative mechanism. A taxpayer cannot be penalized with a 100% penalty for systemic portal failures if they hold valid physical tax invoices and proof of payment.

  • No Automatic Strict Liability: Interest and penalties under section 74 require an element of willful evasion or fraud. A technical mismatch triggered by a portal glitch does not automatically establish tax evasion.

HIGH COURT OF MADRAS
Meenakshi Collections
v.
Assistant Commissioner (ST)
C. Saravanan, J.
W.P. No. 24897 of 2024
W.M.P. No.27250 and 27251 of 2024
JUNE  8, 2026
B. Raveendran for the Petitioner. Ms. Amirtha Poonkodi Dinakaran, Govt. Adv. for the Respondent.
ORDER
1. In this writ petition, the petitioner has challenged the impugned order dated 12.08.2024 passed by the respondent, whereby a demand for the wrong availment of ITC has been confirmed, along with a 100% penalty under Section 74 and interest at 18% under Section 50 of the respective GST enactments.
2. The dispute pertains to the Assessment Year 2017-18 after the defect was pointed out regarding the wrongful availment of Input Tax Credit by the petitioner.
3. In this case, the impugned order has been passed pursuant to a show cause notice (DRC-01) issued under Section 74 on 20.06.2023 for the tax period 2017-2018.
4. The aforesaid notice in DRC-01 dated 20.06.2023 was preceded by an intimation in DRC-01A dated 25.03.2023.
5. The learned counsel for the petitioner would submit that the petitioner has now paid the tax on 22.07.2024. However, the petitioner seeks waiver from payment of penalty and interest under Section 74 and 50 of the respective GST enactments. It is further submitted that the matter may be remitted back to the respondent, so that the case can be decided on merits afresh.
6. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Government Advocate for the respondent.
7. The Input Tax Credit was availed based on the invoices raised on the petitioner on the basis of Self-Assessment under Section 41. The petitioner was, however, unable to obtain certificate from the suppliers in accordance with the guidelines stipulated in Circular No.183/15/2022-GST dated 27.12.2022.
8. The case of the petitioner is that information was not available in Form GSTR-2A, as it was notified only on 15.10.2020 vide Notification No.79/2020 and therefore, the credit that was availed by the petitioner was bonafide.
9. The facts of the case are not in dispute. In fact, the petitioner has admitted that they have availed input tax credit on the supplies effected by the supplier, which were not reflected in Form GSTR-2A.
10. There are overwhelming materials available to infer that there were certain technical glitches in the implementation of the GSTR-2A, which has been acknowledged by the Central Board of Indirect Taxes and Customs in Circular No. 183/15/2022-GST dated 27.12.2022. The relevant portions of the said circular are reproduced below:
“2. It is mentioned that FORM GSTR-2A could not be made available to the taxpayers on the common portal during the initial stages of implementation of GST. Further, restrictions regarding availment of ITC by the registered persons upto certain specified limit beyond the ITC available as per FORM GSTR-2A were provided under rule 36(4) of Central Goods and Services Tax Rules, 2017 (hereinafter referred to as “CGST Rules”) only with effect from 9th October 2019. However, the availability of ITC was subjected to restrictions and conditions specified in Section 16 of CGST Act from 1st July, 2017 itself. In view of this, various representations have been received from the trade as well as the tax authorities, seeking clarification regarding the manner of dealing with such discrepancies between the amount of ITC availed by the registered persons in their FORM GSTR-3B and the amount as available in their FORM GSTR-2A during FY 2017-18 and FY 2018-19.”
11. If indeed Input Tax Credit was availed on the supplies effected to the petitioner in accordance with Section 16 of the respective GST enactments, the petitioner should not be saddled with interest and penalty under Section 74. However, this would require a detailed consideration in terms of the above circular.
12. Considering the same, the case is remitted back to the respondent to pass a fresh order on merits, after considering the evidence and affording the petitioner an opportunity of being heard, within a period of three months from the date of receipt of a copy of this order.
13. If the petitioner is indeed entitled to the input tax credit, neither interest nor penalty shall be justifiable. However, in case the petitioner has no records to substantiate the actual receipt, or if after receipt they have not paid the supplier for the supplies effected, the amount paid by the petitioner shall stand appropriated, and the petitioner shall also pay interest and penalty.
14. In view thereof, the impugned order is quashed, and this writ petition stands disposed of with the above directions. No costs. Connected miscellaneous petitions are closed.