Judicial Corner: HC- Adjudication set aside as ITC denial for GSTR-3B/2A mismatch ignored binding CBIC Circular{ Guru Mahesh Medicals vs. Assistant Commissioner of Commercial Taxes Good and Service Tax Office -240 [2025] 180 taxmann.com 224 (Karnataka)} (15.11.2025)

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HC- Adjudication set aside as ITC denial for GSTR-3B/2A mismatch ignored binding CBIC Circular{ Guru Mahesh Medicals vs. Assistant Commissioner of Commercial Taxes Good and Service Tax Office -240 [2025] 180 taxmann.com 224 (Karnataka)}

Facts

  • The petitioner (Guru Mahesh Medicals) claimed input tax credit under the GST regime for certain periods.
  • The tax-authority (Assistant Commissioner of Commercial Taxes, GST) issued an adjudication showing a mismatch between what was claimed in Form GSTR-3B (the return filed by the recipient) and the auto-populated data in Form GSTR-2A/2B (data from the supplier).
  • The authority denied or sought reversal of the ITC on the basis of that mismatch, without following (or properly following) the procedure laid down by the Central Board of Indirect Taxes & Customs (CBIC) Circular (Circular no. 183/15/2022-GST dated 27.12.2022) which prescribes steps to be followed when there is a discrepancy between GSTR-3B and GSTR-2A.
  • In the adjudication, the petitioner apparently was not given sufficient opportunity to explain or rectify the discrepancy or produce documents from the supplier.

Issue

 Whether the ITC claim can legitimately be denied / reversed solely on the basis of a mismatch between GSTR-3B and GSTR-2A, without following the procedural safeguards prescribed in the CBIC Circular and without giving the taxpayer proper opportunity of hearing / verification of supplier’s compliance.

Held

  • Karnataka High Court set aside the adjudication order and remitted the matter back to the authority for fresh consideration, because the procedural requirements of the CBIC Circular had not been complied with.
  • The Court emphasised that a mere mismatch between GSTR-3B and GSTR-2A (or GSTR-2B) cannot by itself justify automatic denial of ITC especially where the taxpayer has offered to produce documents or supplier certificates.
  • The Court directed that the authority must give the assessee an opportunity to explain, correct (if possible) the discrepancies, obtain supplier’s confirmation, and only thereafter decide.
  • As a result, the matter was remitted to the adjudicating authority to follow the procedure and pass a fresh order.