GSTR-3B vs GSTR-2A Mismatch Alone Cannot Render ITC Ineligible: GSTAT Lucknow Rules in Favour of R R Infrastructure Projects

Background and Nature of the Dispute

The GST Appellate Tribunal (GSTAT), Lucknow Bench, recently delivered a significant ruling in R R Infrastructure Projects Vs Shashi Bhushan Singh, addressing a recurring and consequential question in GST litigation: whether a mere arithmetical difference between Input Tax Credit claimed in FORM GSTR-3B and ITC reflected in FORM GSTR-2A can, by itself, constitute proof of wrongful availment of credit.

The appellant, M/s R R Infrastructure Projects (GSTIN: 09AAJFR3675F1ZV), challenged two adverse orders — Order-in-Original Reference No. ZD091223218172R dated 14.12.2023 and Order-in-Appeal No. GST/181/24 dated 30.12.2024 — both of which had confirmed a demand arising out of the GSTR-3B/GSTR-2A discrepancy for the period July 2017 to March 2018 (Financial Year 2017-18).

The principal tax in dispute stood at Rs. 6,35,288.54, comprising CGST of Rs. 3,17,644.27 and SGST of Rs. 3,17,644.27, raised under Section 73 of the CGST Act and the corresponding provisions of the UPGST Act.

The proceedings originated from Show Cause Notice Reference No. ZD090923245588Q dated 22.09.2023.

Grounds Raised by the Appellant

M/s R R Infrastructure Projects advanced a multi-pronged challenge to the impugned orders, contending that neither the adjudicating authority nor the first appellate authority had conducted a genuine examination of the underlying transactions or the reconciliation submitted by the assessee. The principal contentions included:

  • The demand was framed purely on a mechanical comparison of GSTR-3B and GSTR-2A figures, without any invoice-level or category-level scrutiny.
  • Reverse Charge Mechanism (RCM)-related ITC was not appropriately segregated and evaluated independently, since such credit does not flow through the supplier's GSTR-1 in the conventional B2B sense.
  • Several supplier-side reporting errors during the early GST implementation phase caused genuine credits to remain unreflected in the appellant's GSTR-2A.
  • Certain suppliers had incorrectly reported B2B transactions as B2C, causing the corresponding ITC to be absent from the appellant's GSTR-2A despite the underlying supply being legitimate.
  • Some ITC, while reflected in GSTR-2A, was not claimed in GSTR-3B, which indicated a conservative and bonafide approach.
  • Certain ITC was subsequently reversed in FY 2018-19, which further reduced any net excess credit.
  • The case was squarely covered by CBIC Circular No. 183/15/2022-GST dated 27.12.2022, which specifically deals with ITC discrepancies for FY 2017-18 and FY 2018-19.
  • The principles of natural justice were violated, as the appellant was not afforded an effective opportunity of hearing at either stage of adjudication.

Reconciliation Figures Submitted by the Appellant

As per the detailed reconciliation placed before the Tribunal, the total ITC claimed in GSTR-3B by the assessee aggregated to Rs. 15,05,849.12 (CGST – Rs. 7,52,924.56 + SGST – Rs. 7,52,924.56). Out of this, RCM-related ITC amounted to Rs. 1,61,012 (CGST – Rs. 80,506 + SGST – Rs. 80,506), leaving net ITC against inward supplies at Rs. 13,44,837.12.

The reconciliation further identified that B2C reporting differences alone accounted for CGST – Rs. 2,33,547 and SGST – Rs. 2,33,547, totalling Rs. 4,67,094, while ITC of Rs. 1,33,584.22 was available in GSTR-2A but was not claimed by the assessee.

Natural Justice and the Circumstances of Personal Distress

A notable dimension of the appeal involved the extraordinary personal circumstances that had prevented the partners of M/s R R Infrastructure Projects from effectively participating in the proceedings.

The appellant submitted that a fire broke out on 05.09.2022 at the premises of its sister concern, trading as Levana Suites, following which the partners of the appellant firm were placed in judicial custody for approximately three months. This disruption, the appellant contended, rendered effective monitoring of GST portal communications and compliance with departmental notices wholly impossible during that period.