Analyzing the Mismatch in ITC Claims between GSTR-3B and GSTR-2A

What is a Mismatch in ITC claims?

A mismatch in Input Tax Credit (ITC) claims refers to discrepancies between the ITC claimed by a taxpayer and the ITC available as per the tax authorities' records. These mismatches can occur due to various reasons, including:
Inaccurate Reporting: When the taxpayer claims more or less ITC than what is reflected in their purchases or the GST returns filed by their suppliers.
Delayed Invoicing: If suppliers submit their invoices late or the taxpayer claims ITC before the supplier's details are updated in the system.
Errors in Filing: Mistakes in the GST return, such as incorrect GSTIN, invoice number, or tax amounts, can lead to discrepancies.
Fraudulent Claims: Deliberate attempts to claim ITC on fake or non-existent purchases.
Reconciliation Issues: Lack of proper reconciliation between the books of accounts and GST returns.

Such mismatches can lead to legal and financial consequences, including denial of ITC, penalties, and increased scrutiny from Dept. It's important for businesses to regularly reconcile their accounts and ensure accurate GST filings to avoid mismatches in ITC claims.

Table of Contents

1. Facts in the Matter
2. Grounds of Submission

Check out Taxmann's How to Deal with Department's Notices on GST Input Tax Credit which is practical handbook details the complexities of responding to notices concerning Input Tax Credit (ITC) under GST, providing a step-by-step analysis tailored to specific factual scenarios. It includes comprehensive solutions, grounds for submissions, and supporting case laws.

To,

The Proper Officer,
Central Goods and Services Tax,
New Delhi

Re: M/s XYZ Limited
GSTIN

Subject: Reply to your Notice in Form DRC-01 having Ref. No……… ………………………….. Dated ………………. (hereinafter referred as “impugned notice”)

Sir,

For the above captioned subject, we are in receipt of the impugned notice for the mismatch in ITC claims in GSTR-3B against the Input Tax Credit reflected in GSTR-2A. The reply in this regard along with the facts of the matter are as follows-

1. Facts in the Matter

1.1 We have duly filed all monthly returns as per the requirement under GST Act for the year 2018-19 and annual return for the year 2018-19.

1.2 After filing of annual return, we have received a show cause notice in GST DRC-01 regarding difference in ITC as accrued as per GSTR-2A and ITC availed as per GSTR-3B for the year 2018-19.

1.3 Thus, we are in receipt of the notice alleging that we have claimed Input Tax Credit in violation of provisions Section 42 of CGST Act, 2017 read with section 16(2)(c).

2. Grounds of Submission

We hereby submit following grounds which are independent and without prejudice to one another and before we move ahead we intend to rely upon the decision in the matter of Ashirwad Trading Company v. State of U.P. [2021] 127 taxmann.com 482/86 GST 201 (All.) wherein it has been held that consideration made by the appellate authority on the alternate issue would become operative only in the event it chooses to reject the main submission advanced by the petitioner. The same principle applies on the proper officer and therefore it is requested to pass the order following the principle as narrated above. Moreover, it is further urged to follow the mandate of the principle as set in the judgment of Savvy Fabrics v. Union of India [2023] 154 taxmann.com 451/99 GST 1017/78 GSTL 4 (Bom.); wherein it was held that it was imperative that each ground of submission be considered and discussed.

Before moving ahead and making the submissions, we would like to state following facts which stand undisputed as on date:

• We have a valid GST Invoice issued by the Supplier in respect of supplies made to us.
• We have made the due payment to the Supplier in respect of the Invoices.
• The supplier too has deposited the due tax in respect of the supplies made to us and in respect of the invoices issues in respect of such supplies.
• That the supplies covered by such invoices have been duly received by us and are genuine supplies and genuineness of the supplies have not been doubted by your good self as well.

We are hereby submitting the following grounds which are independent and without prejudice to one another and we reserve the right to challenge the respective grounds independent of each other—

That we intend to rely upon the decision in the matter of State of Karnataka v. Ecom Gill Coffee Trading (P.) Ltd. [2023] 148 taxmann.com 352/72 GSTL 134 (SC) wherein it was stated that:

The dealer claiming ITC has to prove beyond doubt the actual transaction which can be proved by furnishing the name and address of the selling dealer, details of the vehicle which has delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. The aforesaid information would be in addition to tax invoices, particulars of payment etc. In fact, if a dealer claims Input Tax Credit on purchases, such dealer/purchaser shall have to prove and establish the actual physical movement of goods, genuineness of transactions by furnishing the details referred above and mere production of tax invoices would not be sufficient to claim ITC.

In our case, there has been no question raised about the genuineness of the transaction in the impugned notice and thus burden as casted on us under the provision of section 155 has been duly discharged by us. The only question which has been raised is about the non-payment of tax by the supplier. Should your honour require the above details again, we may kindly be given the opportunity to produce the same.

2.1 That there is no provision applicable for 2017-18 and 2018-19 which restricts the claim of Input Tax Credit only to the extent of Input Tax Credit appearing in the GSTR-2A.

2.1.1 That there is no provision applicable for 2017-18 and 2018-19 which restricts the claim of Input Tax Credit only to the extent of Input Tax Credit appearing in the GSTR-2A. That we are hereby reproducing relevant para No. 2 of Circular No. 183/15/2022 which provides as under:

‘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.’

2.1.2 It is pretty clear that claim of Input Tax Credit on the basis of reflection in GSTR-2A could only be made applicable from 9th October 2019 and for the period 2017-18 and 2018-19, only compliance which has to be made is of the provisions of section 16 of the CGST Act, 2017.

2.1.3 Therefore, invoking provisions of section 42 in the instant matter is beyond the provisions of the Statute as the Circular itself provides that there was no statutory provision in place during the period 2017-18 and 2018-19 that Input Tax Credit shall be claimed only on reflection in GSTR-2A.

2.1.4 Therefore, impugned notice has erred in invoking provisions of section 42 for mismatch in ITC as the said provisions are not applicable for the period of 2017-18 and 2018-19 because had such provisions been applicable for the years 2017-18 and 2018-19, circular would have provided that provisions of section 42 are applicable for the years 2017-18 and 2018-19 for availing Input Tax Credit in GSTR-3B only on the basis of reflection in GSTR-2A.

2.1.5 The fact that no such reference has been made is reflective of the fact that there was no provision not even section 42 applicable for the years 2017-18 and 2018-19 which provided that Input Tax Credit in GSTR-3B has to be claimed on the basis of reflection in GSTR-2A.

2.2 That without accepting the Constitutional Validity of rule 36(4) or section 16(2)(aa) and reserving the right to challenge the same if the need arises, it is humbly submitted that the fact that rule 36(4) has been inserted from 9th October 2019 and section 16(2)(aa) has been inserted by Finance Act, 2021 is evidence that no provision under the statute was present for the years 2017-18 and 2018-19 and the entire mismatch in ITC is without any enabling provision.

2.2.1 That rule 36(4) was inserted with effect from 9th October 2019 and the relevant extract of rule 36(4) is being reproduced herein under:

“Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 20 per cent of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.”

2.2.2 Section 16(2)(aa) was inserted vide Finance Act, 2021. The relevant extract of the amendment is as follows:

‘Amendment of section 16.

100. In section 16 of the Central Goods and Services Tax Act, in sub-section (2), after clause (a), the following clause shall be inserted, namely:––

“(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37;”

2.2.3 The statement of objects and reasons to Finance Bill, 2021 further explained the reason for insertion of section 16(2)(aa) of CGST Act, 2017 as follows:

“Clause 100 of the Bill seeks to amend section 16 of the Central Goods and Services Tax Act by inserting a new clause (aa) in sub-section (2) thereof, so as to provide that input tax credit on invoice or debit note may be availed only when the details of such invoice or debit note has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note.”

2.2.4 Thus, it can be seen that the purpose and the reason for inserting the amendment was on the similar lines to rule 36(4) of CGST Rules.

2.2.5 That it is humbly submitted that if rule 36(4) has been inserted with effect from 9th October 2019 and section 16(2)(aa) has been inserted vide Finance Act, 2021, therefore either there was no section for matching of Input Tax credit prior to 9th October 2019 or the same had to be withdrawn post 9th October 2019.

2.2.6 That no such withdrawal or deletion has been made after the insertion of rule 36(4) and section 16(2)(aa). This is itself indicative and evidence of the fact that there existed no provision of matching the Input Tax Credit prior to 9th October 2019.

2.3 That as per Circular No. 183/15/2022 dated 27th December 2022, only conditions relating to section 16 of CGST Act, 2017 are required to be fulfilled.

That the impugned notice does not contain any evidence to the non-compliance on our part under section 16 of CGST Act, 2017 thereby reflecting to the fact that the provisions of section 16 have been complied with and no further action is required on our part and Input Tax Credit claimed by us is correct and proceedings need to be dropped.

2.3.1 That it would also be worthwhile to highlight that Circular No. 183/15/2022 provides that provision of section 16 of the CGST Act, 2017 are required to be satisfied for the period 2017-18 and 2018-19.

2.3.2 That the impugned notice does not contain any evidence to non-compliance of provisions of Section 16 of the CGST Act, 2017 thereby reflecting to the fact that the provisions of section 16 have been complied with by us.

2.3.3 Thus, in view of the above, as provisions of section 16 are required to be complied with and since impugned notice does not contain any evidence to the non-compliance of the said provision, therefore, there is no further action required on our part and the proceedings initiated by the impugned notice be dropped.

2.4 That in the alternative and without prejudice to the grounds raised by us hereinafter in this reply and reserving the right to challenge the impugned proceedings initiated through the notice, the impugned notice seeks to invoke provisions of section 16(2)(c) on the ground that since suppliers have either not filed their GSTR-1 or incorrectly filed their GSTR-1, therefore taxes have not been paid by the suppliers.

That it is humbly submitted that non-filing or incorrect filing of GSTR-1 is not an evidence of suppliers not having paid taxes. There might be scenarios wherein the suppliers had already paid tax but might have filed incorrect GSTR-1 or would not have filed GSTR-1.

Therefore, it is submitted that the impugned show cause notice is illegal and ultra vires to the extent it seeks to rely upon non-filing or incorrect filing of GSTR-1 by the suppliers for the purpose of invoking non-compliance of provisions of section 16(2)(c).

2.4.1 That your honour has provided in the impugned notice that since the entries of Input Tax Credit pertaining to 2018-19 are not reflecting in GSTR-2A, therefore there has been a non-compliance of provisions of section 16(2)(c) of the CGST/RGST Act, 2017.

2.4.2 That non-reflection of the invoices in GSTR-2A is not a proof of the tax not being paid by the suppliers as GSTR-3B is relevant for the taxes being paid and GSTR-1 is relevant for reflection of entry in GSTR-2A.

2.4.3 Therefore, to treat that since entry is not reflecting in GSTR-2A, therefore tax has not been paid is incorrect and illegal.

2.4.4 That hence it is submitted that since the basic prerequisites for initiating provisions of section 16(2)(c) have not been fulfilled by your honour, therefore the impugned proceedings are illegal and demand is sought to be created on the basis of incorrect evidences. Therefore, the consequential demand would also be illegal.

2.5 Provisions of section 42 of CGST Act, 2017 are applicable in cases for matching, reversal and reclaim of Credit and are based on details of inward supply filed by the registered person. Details of Inward Supply in GSTR-2 were required to be filed under section 38 of CGST Act, 2017. That since due date for filing of GSTR-2 has not been notified till date and thus the due date for the process of matching as envisaged in Rule 42 has also been extended by virtue of the provisions of rule 69, no action for non-compliance of provision of section 42 be casted upon us.

2.5.1 Provisions of section 42 are applicable only in cases for matching, reversal and reclaim of Credit and are based on details of inward supply filed by the registered person

2.5.1-1 In this regard we humbly submit that the provisions of section 42 are applicable for matching, reversal and reclaim of input tax credit. We would like to quote relevant provision of section 42 which are as follows:-

42. Matching, reversal and reclaim of input tax credit.— (1) The details of every inward supply furnished by a registered person (hereafter in this section referred to as the “recipient”) for a tax period shall, in such manner and within such time as may be prescribed, be matched––

2.5.1-2 Thus, it can be observed that section 42(1) provides that details of every inward supply furnished by a registered person for a tax period shall be matched for the parameters as provided there in and discussed hereinbelow.

2.5.2 Details of Inward Supply in GSTR-2 were required to be filed under section 38 of CGST Act, 2017

2.5.2-1 It is further submitted that for applicability of provision of section 42, details of inward supply had to be furnished under section 38 of CGST Act.

2.5.2-2 Further provision of section 38 of the CGST Act, 2017 is being reproduced herein under for your ready reference as follows:

“(5) Any registered person, who has furnished the details under sub-section (2) for any tax period and which have remained unmatched under section 42 or section 43, shall, upon discovery of any error or omission therein, rectify such error or omission in the tax period during which such error or omission is noticed in such manner as may be prescribed, and shall pay the tax and interest, if any, in case there is a short payment of tax on account of such error or omission, in the return to be furnished for such tax period”

2.5.2-3 It can be observed from the above that section 38 which provided for filing of GSTR-2 also provided that if recipient has furnished return in Form GSTR-2 and amounts have remained unmatched under sections 42 and 43, then in such case interest would be payable for short payment of tax on account of such error and omission.

2.5.2-4   Therefore, the basic premises of section 42 rested upon the details of inward supply furnished under section 38. The return to be furnished under section 38 was GSTR-2.

2.5.3 That the time limit for furnishing GSTR-2 in Section 38 has not been notified till date

2.5.3-1 That it is humbly submitted that Form GSTR-2 for the period till date has not been notified till date. That the time limit for furnishing returns under section 38(2) and 38(1) has time to time been suspended by issuing following notifications:

The above notifications that have been issued from time to time provide as follows:—

“2. The time limit for furnishing the details or return, as the case may be, under sub-section (2) of section 38 of the said Act, for the months of July, 2017 to June, 2019 shall be subsequently notified in the Official Gazette.”

2.5.3-2 It is pretty clear from the above that return under section 38 have not been notified in official gazette till date and since the returns have not been notified till date therefore section 42 itself cannot be used until then since the very basis of section 42 is the details of inward supplies furnished under section 38 and matching of the same in the manner as provided therein. Since GSTR-2 itself has not been brought in place therefore its matching procedure and implications of non-matching of the credit as provided under section 42(3), 42(5) and 42(6) cannot also be implemented.

2.5.4 Rule 69 of CGST Rules provide that the date of matching under Section 42 of CGST Act, 2017 of Details of Inward Supply should be extended if the due date of filing of GSTR-2 under section 38 has been extended

2.5.4-1 We would like to reproduce relevant extract of rule 69 for your ready reference as follows:

“69. Matching of claim of input tax credit.— The following details relating to the claim of input tax credit on inward supplies including imports, provisionally allowed under section 41, shall be matched under section 42 after the due date for furnishing the return in FORM GSTR-3-

(a) Goods and Services Tax Identification Number of the supplier;

(b) Goods and Services Tax Identification Number of the recipient;

(c) invoice or debit note number;

(d) invoice or debit note date; and

(e) tax amount:

Provided that where the time limit for furnishing FORM GSTR-1 specified under section 37 and FORM GSTR-2 specified under section 38 has been extended, the date of matching relating to claim of input tax credit shall also be extended accordingly”

2.5.4-2 The abovesaid rule provides that if the time limit for furnishing of GSTR-2 under section 38 has been extended then the date of matching relating to claim of input tax credit shall also be extended accordingly.

2.5.4-3 That it is humbly submitted that Form GSTR-2 for the period till date has not been notified till date. That the time limit for furnishing returns under section 38(2) and 38(1) has time to time been suspended by issuing following notifications:

The above notifications that have been issued from time to time provide as follows:—

“2. The time limit for furnishing the details or return, as the case may be, under sub-section (2) of section 38 of the said Act, for the months of July 2017 to June 2019 shall be subsequently notified in the Official Gazette.”

2.5.4-4 That it is humbly submitted that since till date due date for filing of details of inward supply has not been notified, therefore matching as per the provisions of section 42(1) read with rule 69 is not required to be done till date. The date has automatically been extended until the date of filing of GSTR-2 for the relevant period.

2.5.4-5 That since the matching under section 42 is only possible on filing of details of inward supplies under section 38 and date of filing of Return under GSTR-2 under section 38 has not been notified till date, therefore the date of matching by virtue of First Proviso to rule 69 has also been extended. Once the date of matching under section 42 read with Rule 69 has been extended then any action on account of non-compliance of discrepancies as highlighted under the provision of Section 42 cannot be initiated.

2.5.4-6 It has to be borne in mind that provisions of section 42 are a complete code in itself. Once the section is complete code in itself and it provides a manner and the procedure for doing the things and if the system itself is not in place for compliance of provisions of that section, then in such case there cannot be a case for non-compliance of the provisions contained in the section itself.

2.5.4-7 Therefore, in view of the above fact and law cannot compel the us to do the impossible, since firstly by virtue of Proviso to rule 69 of CGST Rules Matching under section 42 cannot be done until the due date for Return under section 38 has been notified and the same has expired, therefore by virtue of the legal principle lex non cogitate ad impossible (the law does not compel the doing of impossibilities), no implications for non-compliance of section 42 can be casted upon us and therefore it is humbly submitted to kindly drop the proceedings initiated against us for non-compliance of section 42.

2.6 System envisaged in section 42 has not been brought in place and therefore no consequence can be levied upon us for its non-compliance.

2.6.1 A Brief description of the same is as follows:

2.6.2 It can be observed from the above that Forms GSTR-2A and GSTR-2 were supposed to be dynamic forms wherein entries first would have been reflected in GSTR-2A and then upon acceptance would have the data flown into GSTR-2. Now although the Credit is being reflected in GSTR-2A however GSTR-3B is not linked with GSTR-2A. The two forms are separate and are not linked to each other.

2.6.3 Furthermore, apart from GSTR-2A being not linked with GSTR-3B as would have been the case between GSTR-2A and GSTR-2, there is no Forms MIS-1 and MIS-2 which would have communicated the finally accepted Input Tax Credit to the Recipient or would have been a tool to communicate discrepancy to the supplier and the recipient.

2.6.4 Further, there was a particular timeline wherein the discrepancies would have been communicated between the recipient and the supplier and if the discrepancy would not have been rectified by the supplier or the recipient, then in such case within the specified time limit the discrepancy as persisting would have been added to the output liability of the recipient. The time line as provided is as follows:

2.6.5 Further, a recipient would have been able to claim provisional credit of the inward supplies, details of which have been uploaded by the supplier only upon including the same by himself and the same being communicated to the supplier for approval. A detailed process for the same was provided under section 38 read with rule 59 of the CGST Rules which broadly provided as under—

• Recipient was required to perform actions as listed below on details submitted and communicated to him.

1. 1. Verify
   2. Validate
   3. Modify
   4. Or if require, delete

Once the above actions were performed, GSTR-2 of the recipient of the supply was to be prepared. The recipient of the supply was entitled to include details of the inward supplies and credit or debit note received by him in respect of such supplies that have not been declared by the outward supplier in his GSTR-1.

• Communication was to be sent to the supplier for Supplies which were deleted or modified by the recipient or Supplies which were not declared by the supplier but were included in the return by the recipient.
• The details of inward supplies added, corrected or deleted by the recipient in his FORM GSTR-2 under section 38 or FORM GSTR-4 or FORM GSTR-6 under section 39 was to be made available to the supplier electronically in FORM GSTR-1A through the common portal. Supplier would have either accepted or rejected modifications made by recipient. The action of accepting or rejecting the details communicated to the outward supplier was to be done on or before the seventeenth day but not before the fifteenth day of the month succeeding the tax period. FORM GSTR-1 furnished earlier by the supplier was to be stood as amended to the extent of modifications accepted by him.

2.6.6 The above mechanism shows that there was an entire system in place for two-way communication between the supplier and the recipient for the claim of credit. There is no such system of communication in place and the forms are also not interlinked with each other.

2.6.7 In case such systems would have been in place, forms would have been interlinked with each other and last but not the least any credit in respect of missing invoice would have been subject to approval by the supplier and if there would not have been any acceptance by the supplier, provisional claim of credit by the recipient would have been added back to the output liability of the recipient in a time bound manner.

2.6.8 That since there was a detailed process in place, therefore there was a need to have separate provisions. However, since the system itself is not in place then in such case, there cannot be a case for non-compliance of such provision.

2.6.9 Since the process as envisaged in section 42 has not been brought in place, therefore the following procedure relating to reflection of the input reversed in Output Liability and being debited to Electronic Credit ledger too has not been brought in place.

2.6.10 It is further submitted that the entire mechanism as provided under Section 42 read with section 50 and rules 69 to 72 made thereunder provide that the input tax credit was to be added to the output liability. Further the return prescribed under GSTR-3 was so designed that Input Tax Credit reversed as mismatch in Input Tax Credit was required to be added to the output liability.

2.6.11 Further it is pretty evident from rule 85(2)(c) of CGST Rules, 2017 that it was electronic liability ledger which was required to be debited with the tax and interest payable as a result of mismatch under section 42 or section 43 or section 50. Further Table 8 of GSTR-3 also reflect that Total Tax Liability consisted of Para 8C which provided for Liability on account of ITC Re-credit and Re-claim. Further Table 8C was to be prepared on the basis of Input Tax Credit reversal and reclaim.

2.6.12 However, reversal made in Table 4B(2) is only debited from the Credit ledger. The Input Tax Credit is not added to the output liability under the Credit Ledger. Therefore, the mechanism which was set in place at the time of applicability of GST has not been implemented till date and therefore it is humbly submitted that since the mechanism as required for the applicability of section 42 has not been implemented till date then there cannot be compliance of provisions of section 42 read with Section 50(3).

2.6.13 Therefore, since provisions of section 42 were to be made applicable and are based upon the mechanism which would have been brought into place provided GSTR-1/2 and 3 would have been brought in place and without the same being brought in place, provisions of Section 42 lacks applicability.

2.6.14 We wish to rely upon the judgment of Hon’ble Apex Court in the matter of Cochin State Power and Light v. State of Kerala on 25 February 1965 Equivalent citations: AIR 1965 SC 1688, 1965 SCR (3) 187 wherein it as held that:

“The performance of this impossible duty must be excused in accordance with the maxim, lex non cogitate ad impossible (the law does not compel the doing of impossibilities), and sub-section (4) of section 6 must be construed as not being applicable to a case where compliance with it is impossible.”

2.6.15 Further, we intend to reply upon judgment of Hon’ble Allahabad High Court in the matter of The Inter College v. The State of U.P. on 6 January 2006 (All HC) wherein it was held that where the law creates a duty and the party is disable to perform it without any default in him and has no remedy over there, the law will excuse him.

2.6.16 We further intend to rely upon the decision of Hon’ble Apex Court in the matter of State of Rajasthan v. Shamsher Singh on 1 May, 1985 Equivalent citations: 1985 AIR 1082, 1985 SCR Supl. (1) 83 wherein it was held that however mandatory the provision may be, where it is impossible of compliance that would be a sufficient excuse for non-compliance, particularly when it is a question of the time factor.

2.6.17 It has to be borne in mind that provisions of section 42 are a complete code in itself. Once the section is complete code in itself and it provides a manner and the procedure for doing the things and if the system itself is not in place for compliance of provisions of that section, then in such case there cannot be a case for non-compliance of the pro- visions contained in the section itself.

2.6.18 Therefore, in view of the above fact and law cannot compel us to do the impossible, since firstly by virtue of Proviso to rule 69 of CGST Rules Matching under section 42 cannot be done until the due date for Return under section 38 has been notified and the same has expired, and secondly the system envisaged has not been brought in place, therefore by virtue of the legal principle lex non-cogitate ad impossible (the law does not compel the doing of impossibilities), no implications for non-compliance of section 42 can be casted upon us and therefore it is humbly submitted to kindly drop the proceedings initiated against us for non-compliance of section 42.

2.7 That some of the suppliers have not uploaded their GSTR-1 and therefore the credit is not reflected in our GSTR-2A. That to put the onerous condition on the recipient to compel the supplier to file and that too a correct GSTR-1 is asking the recipient to do the impossible and is a case of lex non cogitate ad impossible (the law does not compel the doing of impossibilities).

That there are no powers available with the recipient to enforce such compliance and such powers are available with the proper officer which they do not propose to exercise and the responsibility to do the impossible has been casted upon the recipient.

That a person can only be asked to do what is in his hands and asking the recipient to enforce the supplier to file the return is a task for which powers have been vested with the proper officer.

2.7.1 It is humbly submitted that asking us to force the supplier to file the statement of outward supplies is asking us to do the impossible and holding us responsible for the default of another person. In this measure, we would like to quote the maxim of lex non cogitate ad impossible (the law does not compel the doing of impossibilities).

2.7.2 That it is further submitted that there is no power given to the recipient in the statute to enforce compliance by the supplier regarding the Statement to be filed under section 37 which in turn lies with the proper officer of the supplier and the enforcement wing having jurisdiction over the supplier and none of which have taken any action against the erring supplier if any.

2.7.3 That in view of the submission made above, we wish to rely upon the judgment of Hon’ble Apex Court in the matter of Cochin State Power and Light v. State of Kerala on 25 February, 1965 Equivalent citations: AIR 1965 SC 1688, 1965 SCR (3) 187 wherein it was held that:

“The performance of this impossible duty must be excused in accordance with the maxim, lex non-cogitate ad impossible (the law does not compel the doing of impossibilities), and sub-section (4) of section 6 must be construed as not being applicable to a case where compliance with it is impossible.”

2.7.4 Further, we intend to rely upon judgment of Hon’ble Allahabad High Court in the matter of The Inter College v. The State of U.P. 6 January, 2006 (All HC) wherein it was held that where the law creates a duty and the party is disable to perform it without any default in him and has no remedy over there, the law will excuse him.

2.7.5 We further intend to rely upon the decision of Hon’ble Apex Court in the matter of State of Rajasthan v. Shamsher Singh on 1 May, 1985 Equivalent citations: 1985 AIR 1082, 1985 SCR Supl. (1) 83 wherein it was held that however mandatory the provision may be, where it is impossible of compliance that would be a sufficient excuse for non-compliance, particularly when it is a question of the time factor.

2.7.6 That it is further submitted that there is no power given to the recipient in the statute to enforce the compliance of section 37 which in turn lies with the proper officer of the supplier and the enforcement wing having jurisdiction over the supplier and none of which have taken any action against the erring supplier if any.

2.7.7 Since there was no mechanism or power available with us to enforce the compliance of section 37 of CGST Act, 2017 which in turn lies with the proper officer of the supplier and the enforcement wing having jurisdiction over the supplier and none of which have taken any action against the erring supplier if any therefore, it is a fit case of dropping the proceedings in the absence of any mechanism or power to the recipient in the statute against non-compliance as law cannot ask the recipient to do the impossible.

2.8 That the input tax credit claimed is a genuine input tax credit and input tax credit cannot be denied to a genuine recipient.

That the provisions are violative of Article 14 of the Constitution of India and therefore ultra vires to Constitution of India to the extent that they do not make any distinction between a genuine recipient and wilful defaulter.

That the provisions are arbitrary, irrational and unduly harsh and therefore violative of Articles 14 and 19(1)(g) of the Constitution of India.