Karnataka High Court sets aside GST demand for unreconciled ITC in GSTR-3B and GSTR-2A
The Karnataka High Court has permitted a company to reconcile the mismatches between the ITC claimed in its GSTR-3B returns and the data shown in GSTR-2A.
The company, Ganges International Pvt. Ltd, had challenged a tax authority’s order that raised a demand for a wrongfully claimed Input Tax Credit (ITC) under GST.
The tax authority had cited several issues, such as excess ITC claimed, ITC claimed on invoices from non-existent suppliers, and non-payment of GST under the Reverse Charge Mechanism (RCM). Based on these findings, the authority had issued a demand, stating that the company had claimed ineligible ITC.
The company argued that if there were mismatches between the ITC claimed in Form GSTR-3B and the details in Form GSTR-2A, the authority should follow the specific procedure mentioned in Circular No.183/15/2022-GST issued on 27th December 2022. This circular gives clarification for the situation where there are mismatches between the ITC claimed in their GSTR-3B returns and the data reflected in GSTR-2A.
The High Court agreed with the company that this procedure had not been followed. The Court observed that all mismatches between the ITC claimed in Form GSTR-3B and the details in Form GSTR-2A should be allowed to be reconciled according to the circular.
Therefore, the Court set aside the order and sent the matter back to the tax authorities for fresh consideration.
Case Citation: Ganges International Pvt Ltd Vs ACIT (Karnataka HC); WP No. 6885 of 2026; 24/03/2026
