• Dated 10^th April, 2025

Delhi High Court holds ITC cannot be denied merely due to supplier quoting wrong GSTN of same company registered in another state

Background of the Case:

The petitioner is a company engaged in the sale of pharmaceutical products and medical devices. A demand order amounting to Rs. 5.65 crores was issued on the ground of alleged wrongful availment of Input Tax Credit (ITC). The issue arose due to a clerical error by the supplier, who had inadvertently mentioned the petitioner's Bombay GSTN and address on the invoices instead of the correct Delhi GSTN, even though the goods were received and accounted for by the Delhi office. Aggrieved by the denial of ITC solely on this basis, the petitioner approached the Delhi High Court seeking relief.

Issue:

Whether the denial of ITC is justified merely on the technical ground that the supplier's invoices mistakenly reflected the GSTIN and address of the petitioner's Bombay office, instead of the GSTIN registered in Delhi - despite the fact that the purchasing entity remained the same, the transaction was genuine, and no double claim of credit was made.

Contention of the Petitioner:

• The petitioner contended that the only issue was a clerical error by the supplier, who incorrectly mentioned the GSTN of its Bombay branch instead of the Delhi registration.
• It was argued that the entity remained the same across both registrations, the transaction was genuine, and no fraudulent claim or double ITC availment had occurred.
• The petitioner submitted that the substantive conditions under Section 16(2)(aa) of the CGST Act were met in spirit, as the supplier had disclosed the invoice details and the error did not compromise the authenticity of the transaction. They contended that such a minor procedural lapse should not justify denial of ITC

Contention of the Respondent:

• The respondent argued that the petitioner failed to comply with Section 16(2)(aa) of the CGST Act, 2017, which makes it mandatory that the supplier's invoice details are furnished in GSTR-1 and reflected in the recipient's GSTR-2B. Since the invoices carried the GSTIN of the petitioner's Bombay branch, they did not appear in the Delhi unit's GSTR-2B. The department claimed this lapse, even if unintentional, amounted to non-fulfilment of statutory conditions and disentitled the petitioner from claiming ITC.
• The department did not dispute the transaction or claim dual ITC availment.

Held:

• The Court observed that the sole ground for rejecting ITC was the incorrect mention of the petitioner's Bombay GSTN instead of the Delhi GSTN on the invoices.
• It found the lapse to be a minor clerical error, especially since the transaction was genuine and there was no claim of fraudulent intent or double benefit.
• The Court noted that disallowing ITC in such circumstances would cause undue financial hardship to the petitioner.
• Accordingly, the impugned demand order was set aside and the petitioner was allowed to avail ITC for the relevant financial years.

End Notes: This judgment by the Delhi High Court marks a significant step toward promoting a pragmatic and substance-over-form approach in the interpretation of GST law. It underscores that minor procedural lapses—such as an inadvertent error in the GSTIN mentioned on the supplier's invoice - should not result in denial of substantial tax benefits when the underlying transaction is genuine, properly documented, and not fraudulent in nature. The Court's recognition that the recipient company remained the same, regardless of the branch-level GST registration, reinforces the principle that tax credit mechanisms should facilitate seamless flow of credit rather than be used as a tool for penalizing assessees on technicalities. For taxpayers, this decision offers relief and clarity by setting a precedent that clerical mistakes by vendors, particularly in a multi-state registration scenario, should not automatically lead to disallowance of ITC. For the tax administration, it serves as a reminder to balance procedural compliance with commercial realities and fairness.

Case Reference: B. Braun Medical India Pvt. Ltd. Vs Union of India W.P.(C) No. 114 of 2025 and C.M. Appl. No. 434 of 20025, decided on 12-03-2025

Author: Debanjan Ranu

Edited by: Shaily Gupta