# M/s Vivo Mobile India Private Ltd v. U.O.I. & Ors

- **Citation:** (2023) 10 ILRA 472
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-09-05
- **Case number:** Writ Tax No. 433 of 2021
- **Bench:** Saumitra Dayal Singh, Vinod Diwakar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-vivo-mobile-india-private-ltd-v-u-o-i-ors-49450
- **Pages:** 33

## Headnote

Civil Law - Central Goods and Services Tax
Act, 2017 - Sections 16, 37, 41, 42 & 74(9)
- Central Goods and Services Tax Rules,
2017 - Rule 36(4), First Proviso - Input
Tax Credit (ITC) - Cumulative Adjustment
- Quashing of Demand Order - Restitution
Writ Tax No. 433 of 2021 challenging the order
dated 07.04.2021 passed under Section 74(9) of
the
CGST
Act,
2017,
by
the
Deputy
Commissioner, Commercial/St. Tax, Gautam
Buddh Nagar, imposing a demand of Rs. 235.52
crores (tax of Rs. 110,06,90,100.31, equal
penalty, and interest of Rs. 15,40,00,000) for
alleged excess ITC availed for February to
August 2020, in violation of Rule 36(4). The
petitioner,
a
mobile
phone
manufacturer,
argued that the revenue authorities erred in
applying month-to-month ITC reconciliation
instead of cumulative adjustment for the period,
as permitted by the first proviso to Rule 36(4),
introduced by Notification No. 30/2020. The
court held that the proviso allowed cumulative
ITC adjustment in the GSTR-3B return for
September 2020, treating February to August
2020 as a single tax period, rendering the
Circular No. 123/42/2019-GST dated 11.11.2019
unenforceable as it conflicted with the statutory
proviso (Tata Teleservices). The impugned
order's reliance on the Circular was faulty, as it
negated the proviso's intent to relax month-tomonth reconciliation during the COVID-19
period. The court quashed the order, directed
refund
of
Rs.
220,13,80,200.60
and
Rs.
11,00,69,010 within six weeks, with 6% interest
on the excess recovery of Rs. 11,00,69,010 from
10 All. M.s Vivo Mobile India Private Ltd. Vs. U.O.I. & Ors.
473
the date of recovery to refund, and permitted
recovery of up to 10% of the interest from
erring officers.

Writ petition allowed.

Case Law Cited:

## Text

_Characters 0–39,728 of 105,916. This is a partial read: ask again with offset=39728 for what follows._

472 INDIAN LAW REPORTS ALLAHABAD SERIES
process of court or quashing of the same
would otherwise serve the ends of justice.

50. On the basis of foregoing analysis,
the impugned notice dated 13.07.2023 is
found to be unsustainable in the eyes of law
and
as
such
it
is
liable
to
be
quashed.Accordingly, the notice dated
13.07.2023 is hereby quashed.

51. However, it is made clear that the
concerned
respondent
authorities
are
always at liberty to initiate proceedings
afresh, strictly in accordance with the
provisions
of
law,
without
any
premeditation and shall in no manner be
guided by its order dated 13.07.2023
though termed it a Notice, which has been
quashed by this Order.

52. It is further provided that in case
if the respondent authorities take decision
to initiate the aforesaid proceeding afresh,
the same shall be done with an open mind
and by providing due opportunity to the
petitioner to put forward, explain and
substantiate his own version; strictly in
accordance with law by adhering to the
principles of natural justice which are
essential and inescapable while taking
decision affecting the rights of a person.

53. The Writ Petition is accordingly
allowed. No order as to cost.
----------
(2023) 10 ILRA 472
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 05.09.2023

BEFORE

THE HON'BLE SAUMITRA DAYAL SINGH, J.

THE HON'BLE VINOD DIWAKAR, J.

Writ Tax No. 433 of 2021

M/s Vivo Mobile India Private Ltd.
 ...Petitioner
Versus
U.O.I. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Nishant Mishra, Sri Alok Yadav, Sri
Kishore Kunal, Ms. Vedika Nath, Sri Tarun
Gulati (Sr. Advocate)

Counsel for the Respondents:
A.S.G.I., Sri Ashok Singh, C.S.C., Sri Manu
Ghildyal, Sri Gaurav Mahajan

Civil Law - Central Goods and Services Tax
Act, 2017 - Sections 16, 37, 41, 42 & 74(9)
- Central Goods and Services Tax Rules,
2017 - Rule 36(4), First Proviso - Input
Tax Credit (ITC) - Cumulative Adjustment
- Quashing of Demand Order - Restitution
Writ Tax No. 433 of 2021 challenging the order
dated 07.04.2021 passed under Section 74(9) of
the
CGST
Act,
2017,
by
the
Deputy
Commissioner, Commercial/St. Tax, Gautam
Buddh Nagar, imposing a demand of Rs. 235.52
crores (tax of Rs. 110,06,90,100.31, equal
penalty, and interest of Rs. 15,40,00,000) for
alleged excess ITC availed for February to
August 2020, in violation of Rule 36(4). The
petitioner,
a
mobile
phone
manufacturer,
argued that the revenue authorities erred in
applying month-to-month ITC reconciliation
instead of cumulative adjustment for the period,
as permitted by the first proviso to Rule 36(4),
introduced by Notification No. 30/2020. The
court held that the proviso allowed cumulative
ITC adjustment in the GSTR-3B return for
September 2020, treating February to August
2020 as a single tax period, rendering the
Circular No. 123/42/2019-GST dated 11.11.2019
unenforceable as it conflicted with the statutory
proviso (Tata Teleservices). The impugned
order's reliance on the Circular was faulty, as it
negated the proviso's intent to relax month-tomonth reconciliation during the COVID-19
period. The court quashed the order, directed
refund
of
Rs.
220,13,80,200.60
and
Rs.
11,00,69,010 within six weeks, with 6% interest
on the excess recovery of Rs. 11,00,69,010 from
10 All. M.s Vivo Mobile India Private Ltd. Vs. U.O.I. & Ors.
473
the date of recovery to refund, and permitted
recovery of up to 10% of the interest from
erring officers.

Writ petition allowed.

Case Law Cited:

1. U.O.I. Vs Bharti Airtel Ltd., (2022) 4 SCC 328
(Paras 16, 44, 50)

2. Suncraft Energy Pvt. Ltd. Vs Assistant
Commissioner, St. Tax, MAT 1218 of 2023
(Calcutta HC, 02.08.2023) (Paras 17, 50)

3. Tata Teleservices Ltd. Vs CCE, (2006) 194
ELT 11 (SC) (Para 14, 82)

4. Sandur Micro Circuits Ltd. Vs Commissioner of
Central Excise, (2008) 229 ELT 641 (SC) (Para
14)

5. U.O.I. Vs Intercontinental (India), (2008) 226
ELT 16 (SC) (Para 14)

6. Alfa Laval (India) Ltd. Vs U.O.I., (2014) 309
ELT 17 (Bom) (Para 14)

7. CCE, Pune Vs Dai Ichi Karkaria Ltd., (1999)
112 ELT 353 (SC) (Para 15)

8. Eicher Motors Ltd. Vs U.O.I., (1999) 106 ELT
3 (SC) (Para 15)

(Delivered by Hon'ble Saumitra Dayal
Singh, J.
&
Hon'ble Vinod Diwakar, J.)

1. Heard Sri Tarun Gulati, learned
Senior Counsel assisted by Sri Nishant
Mishra, Sri Kishore Kunal, and Ms. Vedika
Nath, learned counsel for the petitioner, Sri
Gaurav Mahajan, learned counsel for
Central Board of Indirect Taxes, Sri Manish
Goyal,
learned
Additional
Advocate
General assisted by Sri Nimai Dass, learned
Additional Chief Standing Counsel and Sri
Ankur Agarwal, learned Standing Counsel
for the State of Uttar Pradesh.

2. Present petition has been filed for
various reliefs described in the prayer
clause. At the same time, after exchange of
affidavits and, upon the matter being heard,
prayer nos. B, C and D alone have been
pressed. Other prayers have not been
pressed, at this stage. Thus, the challenge
raised to the vires of Rule 36(4) of the
Central Goods and Services Tax Rules,
2017 (hereinafter referred to as the 'CGST
Rules, 2017'), has been specifically given
up, at this stage.

3. Primary relief being sought by the
petitioner is against the order dated
7.4.2021
passed
by
the
Deputy
Commissioner, Sector-2, Commercial/State
Tax, Gautam Buddh Nagar. By that order,
passed under Section 74 (9) of the CGST
Act, 2017 (hereinafter referred to as 'the
Act'), the said authority has opined that the
petitioner had availed/utilised excess Input
Tax
Credit
(ITC
in
short),
Rs.
110,06,90,100.31,
for the
months
of
February 2020 to August 2020. Construing
the same to be a violation of Rule 36(4) of
the CGST Rules, 2017, it has been directed
to be reversed and added to the output tax
liability of the petitioner, with consequent
interest obligation. Also, an equal amount
of penalty referable to Section 74 of the
Central Goods and Service Tax Rules, 2017
has been imposed. Thus, total demand of
Rs. 235.52 crores had been created -
inclusive of interest @ Rs. 15,40,00,000/-.
Against that demand, the petitioner had
self-deposited
Rs.
11,00,69,010/-
(provisionally, pending this writ petition)
being 10% of the disputed demand of tax.
However, it has disputed the entire liability.

4. Upon the present petition being
entertained, initially, affidavits were called.
However, the stay application remained
pending.
Meanwhile,
the
respondents
474 INDIAN LAW REPORTS ALLAHABAD SERIES
recovered the entire amount of tax, Rs.
110,06,90,100.31 and equal amount of
penalty,
excluding
interest.
Thus,
notwithstanding
the
pre-deposit
Rs.
11,00,69,010/-
made
(provisionally,
pending this writ petition), further Rs.
220,13,80,200.60 were recovered. Later, by
order dated 21.9.2022, interim protection
was granted to the following effect:

"However, it is provided that till
the next date of listing, no further coercive
measure shall be taken against the
petitioner pursuant to the order dated
07.04.2021, which is subject matter of
challenge herein."

The balance amount of interest
was thus stayed.

5. An application Civil Misc.
Restitution Application No. 10 of 2022 has
been filed. Thereby, the petitioner has
sought a refund of the entire amount of
deposit made, being Rs. 220,13,80,200.60
and Rs. 11,00,69,010/- (deposited earlier on
14.06.2022, against the disputed demand).
Interest claim has also been made on the
above refundable amount.

6. Separate Counter Affidavit and
Rejoinder Affidavit have been filed to the
Restitution Application. Primarily, the
defence being set up by the revenue
authorities is - they had recovered the
disputed amount of tax, penalty, and
interest as there was no stay order operating
in favour of the petitioner. At the same
time, it remains admitted that an amount,
Rs. 11,00,69,010/- had been recovered over
and above the disputed demand.

7.

The
petitioner
is
a
duly
incorporated company engaged in the
business of manufacture, assembly and
wholesale trade in cellular phone devices,
their spare parts, and accessories. It has a
manufacturing facility at Greater Noida,
Gautam Buddh Nagar, inside the State of
U.P.

8. For the months of February 2020 to
August 2020, the petitioner purchased
various components of mobile phones etc.
from different suppliers within the country.
Those purchases were disclosed against the
regular Tax Invoice, received by the
petitioner. To that extent, there is no dispute
between the parties. At the same time,
against such purchases made, in the claim
of ITC, there exists a dispute between the
parties.

9. The petitioner claims there is no excess
claim made by it, for the months (period)
February 2020 to August 2020. The
revenue claims otherwise. Arising from
such difference of perception, a common
tabular chart (for the period under dispute),
reflecting the Tax Invoice figures as per
GSTR-3B (filed by the petitioner) and
GSTR-2A
(generated
upon
details
furnished by the suppliers), as also the
computation of ITC as per Rule 36(4) of
CGST Rules, 2017, and the now disputed
mismatch thereof, has been prepared by the
revenue authorities. It is a part of the
impugned order itself. It reads as below:
10 All. M.s Vivo Mobile India Private Ltd. Vs. U.O.I. & Ors.
475

10. Briefly, learned Senior Counsel
for the petitioner states, the revenue
authorities have
completely
erred in
looking at a month-to-month reconciliation
of ITC available and utilised, as per GSTR3B filed by the petitioner and GSTR-2A
generated for the period February 2020 to
August 2020, on a month-to-month basis.
They ought to have looked at that period as
a single tax period beginning for the month
February 2020 and ending with the month
August
2020
-
all
months
taken
cumulatively i.e., as a single tax period
beginning 1.2.2020 and ending 31.8.2020.
All Tax Invoices that were accounted for as
per GSTR-2A (referable to the petitioner),
at the time of filing the monthly return for
September 2020, alone should have been
considered. That final figure alone should
have been considered as the eligible ITC
for the months/tax period February 2020 to
August 2020. It is to that figure, 10%
permissible addition (as was available at
the relevant time), should have been
allowed to arise [in terms of the proviso to
Rule 36(4) of the CGST Rules, 2017].
Against that, the total ITC availed for those
months/tax period should have been
contrasted. In that, there was no excess
utilisation of ITC.

11. Thus, in September 2020, the
cumulative figure of ITC (earned for the
period February 2020 to August 2020),
stood verified at Rs. 88,63,460,752.04.
Giving effect to sub-Rule 4 of Rule 36, the
petitioner
claims
entitlement
to
an
additional 10% of that value, leading to
total eligible ITC Rs. 97,49,806,827.24.
There being no dispute to the fact that the
petitioner had utilised ITC of value Rs.
89,35,040,324.89, during that period, the
petitioner had available, unutilized positive
credit of ITC of about 81 crores, in
September 2020. It was carried forward.
Hence, the demand of tax, interest and
penalty is

12. Again briefly, the above error in
the computation made by the revenue
authorities is stated to have arisen upon
misreading of the Circular issued by the
Central Board of Indirect Taxes and
Customs (CBIC in short). Thus, a serious
challenge has been laid to Circular No.
123/42/219-GST
dated
11.11.2019,
specifically clause 3(3) thereof. That
administrative instruction issued by the
CBIC is described to be in the teeth of Rule
36(4) of the Rules read with its first
proviso. Insofar as the Rule referred to
above prescribed a cumulative period only,
it
was
never
made
open
to
the
administrative authorities to override that
piece of delegated legislation to provide for
a
month-to-month
reconciliation,
by
engaging and reading the words "on the
due date of filing of the returns" (used in
the impugned Circular), as the date when
reconciliation
was
to
be
made.
Alternatively, it has been submitted, since
the
Circular
was
issued
prior
to
introduction of the first proviso to Rule
36(4), it therefore lost its contrary intent
and consequentially its enforceability-to the
binding
force
of
law
created
upon
476 INDIAN LAW REPORTS ALLAHABAD SERIES
incorporation of the first proviso to Rule
36(4) w.e.f. 03.04.2020.

13. To bolster his submission, the
learned Senior Counsel has laid emphasis
on the provisions of the Act to establish
that the ITC is the backbone of the GST
regime. Entitlement thereto arises under
Section 16 of the Act by way of a statutory
right. The same cannot be defeated either
by
administrative
instructions
or
by
construing the law in any other manner. He
has
also
referred
to
Circular
No.
123/42/219-GST
dated
11.11.2019
(paragraph-3), Circular No. 59/33/2018GST dated 04.09.2018 (paragraph 2.3),
Press Release dated 18.10.2018 (paragraph4), Circular No. 125/44/2019-GST dated
18.11.2019 (paragraph-3, 36 and 61), Press
release dated 04.05.2018 (paragraph-iv),
Circular
No.
07/07/2017-GST
dated
01.09.2017 (paragraph-1, 8 and 9), Circular
No. 26/26/2017-GST dated 29.12.2017
(paragraph-3), Minutes of the 28th GST
Council
Meeting
dated
21.07.2018
(paragraph 18.3).

14. In support of his submission that a
Circular can neither take away a statutory
right or benefit nor it can impose a new
condition, he has also placed reliance on
the decisions of the Supreme Court in
Sandur
Micro
Circuits
ltd.
Vs.
Commissioner
of
Central
Excise,
2008(229)
ELT
641
(SC),
Tata
Teleservices
Vs.
Commissioner
of
Customs, (2006) 194 ELT 11 (SC), Union
of India Vs. Intercontinental (India),
2008 (226) ELT 16 (SC) and Alfa Laval
(India) Ltd. Vs. Union of India, 2014
(309) ELT 17 (Bom).

15. Further reliance has been placed
on the decision of the Supreme Court in
CCE, Pune Vs. Dai Ichi Karkaria Ltd.,
1999 (112) ELT 353 (SC) and Eicher
Motors Ltd. Vs. Union of India, 1999
(106) ELT 3, to submit that the restrictions
being conjured on the strength of the
impugned
Circular
would
remain
confiscatory in the scheme of the Act which
is consistent to the provisions of the Article
300A of the Constitution of India.

16. Reliance has also been placed on a
decision of the Supreme Court in Union of
India vs. Bharti Airtel Ltd. and Others
(2022)4 SCC 328, primarily, to emphasize
that Form GSTR-2A does not create a
substantive right but works as a facilitator
to help the petitioner take an informed
decision for the purpose of self-assessment.
That principle is an integral part of the
scheme of the GST regime. Therefore, even
otherwise no over reliance may have been
placed on GSTR-2A as it existed even at
the time of furnishing of original returns -
Form GSTR 3B by the petitioner, for the
months of February 2020 to August 2020.

17. Further, reliance has been placed
on a recent decision of the Calcutta High
Court
in
Suncraft
Energy
Private
Limited and Another Vs. The Assistant
Commissioner, State Tax, Ballygunge
Charge and Others, MAT 1218 of 2023
decided on 02.8.2023 to submit, furnishing
of details on GSTR-I by a supplier and the
corresponding information that arises to the
purchaser on GSTR-2A is nothing more
than a facilitation that does not have any
effect on the ability of the taxpayer to avail
ITC on self-assessment. That would remain
governed by the provisions of Section 16 of
the Act.

18. Thus, both in view of the clear
language of the law that must prevail over
the
Circular/Administrative
Instruction
dated 11.11.2019, as also on the test of
10 All. M.s Vivo Mobile India Private Ltd. Vs. U.O.I. & Ors.
477
general principle that arises under the GST
regime, the construction made by the
respondent-revenue authorities is wholly
unfounded in law.

19. The fact that the revenue
authorities chose to disregard that law and
recovered the entire amount while the
matter was being seriously contested before
this Court, is described to have given rise to
the entitlement of full restitution together
with interest at the market rate, on such
restitution.

20. In reply, the learned Additional
Advocate General has passionately urged
that there is no error in the impugned order
and/or the Circular. In the first place,
GSTR-3B is the monthly return prescribed
to be filed by 20th March 2020. That
requirement of the law was not waived or
relaxed, to any extent. Also, the GSTR-2A
pertaining to the present petitioner would
have been auto populated on the strength of
the details fed by the individual suppliers
on GSTR-I. Therefore, the ITC available to
the petitioner for each month including the
months of February 2020 to August 2020,
remained fixed and unaltered, being
dependent solely on the figures disclosed
by the individual suppliers on Form GSTRI.
Next,
it
has
been
urged,
no
dealer/supplier could file more than one
return/Form GSTR-3B for any month. Only
a revision of that return was permissible, in
certain facts and circumstances. Therefore,
the petitioner could, and it filed only
original return on Form GSTR Form-3B,
for each of the months from February
2020 to August 2020. Those returns not
revised, it never became open to the
petitioner to claim any amount by way of
ITC, more than the amount already
disclosed as per GSTR-2A and the
monthly returns filed. That being the
fundamental scheme of the Act read with
Rules, the interpretation being offered by
the petitioner that the ITC should have
been computed as a single figure for the
entire period February 2020 to August
2020, as it stood in September 2020 and
violation of law/excess utilization of ITC,
should have been seen in comparison to
such single/cumulative figure, is against
the scheme and provisions of the Act. To
that end, the Circular letter dated
11.11.2019 is wholly enforceable.

21. In support of his submission, the
learned Additional Advocate General has
referred to the provision of Section 37 of
the Act that clearly requires filing of
GSTR-1 before the 10th day of the
following month. Next, reference has
been made to Section 41(1) of the Act, as
existed prior to its amendment, to submit,
originally the credit of ITC arose on a
provisional basis. To that, additional
amounts @ 20% later reduced to 10%,
still later reduced to 5% became available
to registered persons, every month. Later,
that was done away. In any case, such
provisional credit remained subject to
conditions and restrictions imposed by
the Act and the Rules framed thereunder.
Hence, the provisions of Rule 36 (4) of
the Rules that have been heavily relied on
by the learned Senior Counsel for the
petitioner would have to take colour from
the language of Section 41(1) of the Act.
He has also referred to Section 41 (3) (as
earlier
existed)
to
submit,
any
discrepancy that may have arisen had to
be communicated by the dealer availing
the excess ITC. That excess claim was
then required to be rectified under
Section 42(5) of the Act. By way of a pari
materia provision (under Section 43 as then
existed), a similar addition was to be made
at the hands of the supplier.
478 INDIAN LAW REPORTS ALLAHABAD SERIES

22. Referring to the impugned order,
primarily the chart extracted above, it has
been submitted, the revenue authorities
have given an exact reconciliation to the
petitioner as entitled - for each month i.e.,
February, March, April, May, June, July,
August, and September 2020. The amounts
found mentioned in the monthly returns on
Form GSTR-3B and the amounts found
recorded in the GSTR-2A for each of those
months, have been exactly mentioned.
There is no dispute raised by the petitioner
as to the correctness of any of those
amounts. To that, 10% additional benefit
has been computed in the fourth column of
that chart - being the ITC entitlement
available at the relevant time. It is in
accordance with Rule 36(4) of the Rules.
Having
computed
those
figures,
the
revenue authorities found, in certain
months the petitioner had not committed
any violation since it had availed ITC less
than
the
amount
of
ITC
available.
However, for the months of June 2020 and
September 2020, the petitioner had over
utilized
ITC
to
the
extent
of
Rs.
78,26,19,793.51 and Rs. 1,83,70,31,069.19,
respectively. Thus, the petitioner was found
to
have
excess
utilized
ITC
Rs.
110,06,90,100.31. Being the cumulative
excess utilized figure for the months of
June 2020 to September 2020, the Proper
Officer has rightly directed its reversal.
Since the explanation of the petitioner was
found to be non-satisfactory, interest and
penalties have also been demanded, in
accordance with law.

23. In this regard, it has been
strenuously urged, the petitioner never
raised any objection before the assessing
authority and in fact, the petitioner has not
raised any objection before this Court to the
effect that the figure of ITC available for
the months of February 2020 to August
2020 should have been taken cumulatively
and the ITC utilized for that period should
also have been taken cumulatively as a
single figure treating that period to be a
single/cumulative period. Referring to the
reply that had been submitted by the
petitioner before the revenue authority it
has been stated - the claim being now made
was not raised by the petitioner, either
before the authorities or this Court. Then,
referring to the impugned order, it has been
asserted, all the objections had been duly
considered.

24. Since the due date for filing Form
GSTR-3B was never extended, Shri Goyal
would contend, the figure of ITC available
to the petitioner remained fixed and
relatable to the date of filing of that Form.
There being no dispute to the fact that the
Form GSTR-3B had to be filed on the tenth
of the following month, the claim being
now made by the petitioner has no basis. To
bolster his submission, heavy reliance has
been placed on Circular No. 136 dated
03.04.2020.

25. Referring to paragraph no.3 of the
said Circular in extenso, it has been urged,
Clause 6 of paragraph 3 of the said Circular
makes it plain that the due date of filing of
return of form GSTR-I was not altered.
Only the requirement to pay a late fee had
been waived for the tax period March 2020
to April 2020 and May 2020 as also for the
quarter ending 31 March 2020, subject to
the same being furnished on or before
30.06.2020. Referring to Clause 7 of
paragraph 3 of that Circular, again it has
been submitted, no benefit of the kind
claimed by the petitioner was ever
conferred.

26. In support of his submission, the
learned Additional Advocate General has
10 All. M.s Vivo Mobile India Private Ltd. Vs. U.O.I. & Ors.
479
also referred to the Notifications with
respect to which the above Circular had
been issued. According to him, Notification
No. 30 of 2020 only sought to add proviso
to Rule 36(4) with effect from 31.3.2020.
Similarly, Notification No. 31 of 2020 only
provided for variable interest in the event
of late filing of returns. Notification no. 32
of 2020 only provided for waiver of the late
fee. Similarly, Notification no.33 of 2020
only provided for a late fee on late filing of
GSTR-I. In the same light, Notification
no.35 of 2020 provided benefit of extension
of time limits, to complete or comply any
action by any authority etc., that may
otherwise have been required to be
completed or complied between 30.3.2020
to 29.6.2020. That timeline was extended
up to 30.06.2020. However, while issuing
such beneficial notifications and while
clarifying that law, no provision was made
to extend the date of filing of form GSTR3B.

27. Based on that stand, it has been
doggedly asserted that the ITC credit
remained frozen between the 11th and the
20th of the following month, for the
transactions performed in the month
immediately preceding that. Second, the
situation is covered by Circular No. 136
dated 03.04.2020 and no challenge has
been raised thereto. Therefore, the claim
being made by the petitioner is wholly
unfounded.

28. Having heard learned counsel for
the parties and having perused the record,
before we embark on any discussion as to
the rival submissions advanced, it is useful
to refer to the provisions of the Act and the
Rules and the Circulars as have been
extensively referred to by learned counsel
for the parties. In the first place, Section 16
of the Act reads as below:

"16. Eligibility and conditions
for taking input tax credit

(1) Every registered person shall,
subject to such conditions and restrictions
as may be prescribed and in the manner
specified in section 49, be entitled to take
credit of input tax charged on any supply of
goods or services or both to him which are
used or intended to be used in the course or
furtherance of his business and the said
amount shall be credited to the electronic
credit ledger of such person.

(2)
Notwithstanding
anything
contained in this section, no registered
person shall be entitled to the credit of any
input tax in respect of any supply of goods
or services or both to him unless,--

(a) he is in possession of a tax
invoice or debit note issued by a supplier
registered under this Act, or such other tax
paying documents as may be prescribed;

[(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;]

(b) he has received the goods or
services or both.

[Explanation : For the purposes
of this clause, it shall be deemed that the
registered person has received the goods or,
as the case may be, services -

(i) where the goods are delivered
by the supplier to a recipient or any other
person on the direction of such registered
person, whether acting as an agent or
otherwise, before or during movement of
goods, either by way of transfer of
documents of title to goods or otherwise;

(ii)
where
the
services
are
provided by the supplier to any person on
the direction of and on account of such
registered person.]
480 INDIAN LAW REPORTS ALLAHABAD SERIES

[(ba) the details of input tax
credit in respect of the said supply
communicated to such registered person
under Section 38 has not been restricted;]

(c) subject to the provisions of
Section 41, CGST (Amdt.) Act, 2018 (31 of
2018), dt. 30.8.2018, the tax charged in
respect of such supply has been actually
paid to the Government, either in cash or
through utilisation of input tax credit
admissible in respect of the said supply;
and

(d) he has furnished the return
under section 39:

PROVIDED that where the goods
against an invoice are received in lots or
instalments, the registered person shall be
entitled to take credit upon receipt of the
last lot or instalment:

PROVIDED
FURTHER
that
where a recipient fails to pay to the
supplier of goods or services or both, other
than the supplies on which tax is payable
on reverse charge basis, the amount
towards the value of supply along with tax
payable thereon within a period of one
hundred and eighty days from the date of
issue of invoice by the supplier, an amount
equal to the input tax credit availed by the
recipient shall be added to his output tax
liability, along with interest thereon, in
such manner as may be prescribed:

PROVIDED
ALSO
that
the
recipient shall be entitled to avail of the
credit of input tax on payment made by him
of the amount towards the value of supply
of goods or services or both along with tax
payable thereon.

(3) Where the registered person
has claimed depreciation on the tax
component of the cost of capital goods and
plant and machinery under the provisions
of the Income-tax Act, 1961(43 of 1961),
the input tax credit on the said tax
component shall not be allowed.

(4) A registered person shall not
be entitled to take input tax credit in respect
of any invoice or debit note for supply of
goods or services or both after the due date
of furnishing of the return under section 39
for the month of September following the
end of financial year to which such invoice
or invoice relation to such debit note
pertains or furnishing of the relevant
annual return, whichever is earlier.

[Provided that the registered
person shall be entitled to take input tax
credit after the due date of furnishing of the
return under section 39 for the month of
September, 2018 till the due date of
furnishing of the return under the said
section for the month of March, 2019 in
respect of any invoice or invoice relating to
such debit note for supply of goods or
services or both made during the financial
year 2017-18, the details of which have
been uploaded by the supplier under subsection (1) of section 37 till the due date for
furnishing the details under sub-section (1)
of said section for the month of March,
2019.]"

29. Next, relevant extract of Section
37 of the Act reads as below:

"37.
Furnishing
details
of
outward supplies.

(1) Every registered person, other
than an Input Service Distributor, a nonresident taxable person and a person
paying tax under the provisions of section
10 or section 51 or section 52, shall
furnish, electronically, 1[subject to such
conditions and restrictions and] in such
form and manner as may be prescribed, the
details of outward supplies of goods or
services or both effected during a tax
period on or before the tenth day of the
month succeeding the said tax period and
such details 2[shall, subject to such
10 All. M.s Vivo Mobile India Private Ltd. Vs. U.O.I. & Ors.
481
conditions and restrictions, within such
time and in such manner as may be
prescribed,
be
communicated
to
the
recipient of the said supplies:]

PROVIDED that the registered
person shall not be allowed to furnish the
details of outward supplies during the
period from the eleventh day to the fifteenth
day of the month succeeding the tax period:

PROVIDED
further that
the
Commissioner may, for reasons to be
recorded in writing, by notification, extend
the time limit for furnishing such details for
such class of taxable persons as may be
specified therein:

PROVIDED
also
that
any
extension of time limit notified by the
Commissioner
of
State
tax
or
Commissioner of Union territory tax shall
be
deemed
to
be
notified
by
the
Commissioner.

(2) Every registered person who
has been communicated the details under
sub- section (3) of section 38 or the details
pertaining to inward supplies of Input
Service Distributor under sub-section (4) of
section 38, shall either accept or reject the
details so communicated, on or before the
seventeenth day, but not before the fifteenth
day, of the month succeeding the tax period
and the details furnished by him under subsection
(1)
shall
stand
amended
accordingly.

(3) Any registered person, who
has furnished the details under sub-section
(1) 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 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:

PROVIDED that no rectification
of error or omission in respect of the details
furnished under sub-section (1) shall be
allowed after 8[the thirtieth day of
November] following the end of the
financial year to which such details
pertain, or furnishing of the relevant
annual return, whichever is earlier.

PROVIDED FURTHER that the
rectification of error or omission in respect
of the details furnished under sub-section
(1) shall be allowed after furnishing of the
return under section 39 for the month of
September, 2018 till the due date for
furnishing the details under sub-section (1)
for the month of March, 2019 or for the
quarter January, 2019 to March, 2019.

Explanation : For the purposes of
this Chapter, the expression "details of
outward supplies" shall include details of
invoices, debit notes, credit notes and
revised invoices issued in relation to
outward supplies made during any tax
period".

30. Then, Section 38 of the Act, as
then existed, is quoted below:

"38. Furnishing details of inward
supplies.─(1) Every registered person,
other than an Input Service Distributor or a
non-resident taxable person or a person
paying tax under the provisions of section
10 or section 51 or section 52, shall verify,
validate, modify or delete, if required, the
details relating to outward supplies and
credit or debit notes communicated under
sub-section (1) of section 37 to prepare the
details of his inward supplies and credit or
debit notes and may include therein, the
details of inward supplies and credit or
debit notes received by him in respect of
such supplies that have not been declared
by the supplier under sub-section (1) of
section 37.
482 INDIAN LAW REPORTS ALLAHABAD SERIES

(2) Every registered person, other
than an Input Service Distributor or a nonresident taxable person or a person paying
tax under the provisions of section 10 or
section 51 or section 52, shall furnish,
electronically,
the
details
of
inward
supplies of taxable goods or services or
both, including inward supplies of goods or
services or both on which the tax is payable
on reverse charge basis under this Act and
inward supplies of goods or services or
both taxable under the Integrated Goods
and Services Tax Act or on which
integrated goods and services tax is
payable under section 3 of the Customs
Tariff Act, 1975 (51 of 1975), and credit or
debit notes received in respect of such
supplies during a tax period after the tenth
day but on or before the fifteenth day of the
month succeeding the tax period in such
form and manner as may be prescribed:
Provided that the Commissioner may, for
reasons to be recorded in writing, by
notification, extend the time limit for
furnishing such details for such class of
taxable persons as may be specified therein
:

Provided
further
that
any
extension of time limit notified by the
Commissioner
of
State
tax
or
Commissioner of Union territory tax shall
be deemed to be notified by the

(3)
The
details
of
supplies
modified, deleted or included by the
recipient and furnished under sub-section
(2) shall be communicated to the supplier
concerned in such manner and within such
time as may be prescribed.

(4)
The
details
of
supplies
modified, deleted or included by the
recipient in the return furnished under subsection (2) or sub-section (4) of section 39
shall be communicated to the supplier
concerned in such manner and within such
time as may be prescribed.

(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 :

Provided that no rectification of
error or omission in respect of the details
furnished under sub-section (2) shall be
allowed after furnishing of the return under
section 39 for the month of September
following the end of the financial year to
which such details pertain, or furnishing of
the relevant annual return, whichever is
earlier."

31. Also, Section 41 of the Act, as
then existed, is quoted below:

"41 Claim of input tax credit and
provisional acceptance thereof.─(1) Every
registered person shall, subject to such
conditions and restrictions as may be
prescribed, be entitled to take the credit of
eligible input tax, as self-assessed, in his
return and such amount shall be credited
on a provisional basis/to his electronic
credit ledger.

(2) The credit referred to in subsection (1) shall be utilised only for
payment of self- assessed output tax as per
the return referred to in the said subsection."

32. Further, Section 42 of the Act
provided a mechanism for matching,
reversal and reclaim of ITC. At the relevant
time, it read:
10 All. M.s Vivo Mobile India Private Ltd. Vs. U.O.I. & Ors.
483

"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--

(a) with the corresponding details
of outward supply furnished by the
corresponding registered person (hereafter
in
this
section
referred
to
as
the
"supplier") in his valid return for the same
tax period or any preceding tax period;

(b) with the integrated goods and
services tax paid under section 3 of the
Customs Tariff Act, 1975 in respect of
goods imported by him; and

(c) for duplication of claims of
input tax credit.

(2) The claim of input tax credit
in respect of invoices or debit notes relating
to inward supply that match with the details
of corresponding outward supply or with
the integrated goods and services tax paid
under section 3 of the Customs Tariff Act,
1975 in respect of goods imported by him
shall
be
finally
accepted and such
acceptance shall be communicated, in such
manner as may be prescribed, to the
recipient.

(3) Where the input tax credit
claimed by a recipient in respect of an
inward supply is in excess of the tax
declared by the supplier for the same
supply or the outward supply is not
declared by the supplier in his valid
returns,
the
discrepancy
shall
be
communicated to both such persons in such
manner as may be prescribed.

(4) The duplication of claims for
reduction in output tax liability shall be
communicated to the supplier in such
manner as may be prescribed.

(5) The amount in respect of
which any discrepancy is communicated
under sub- section (3) and which is not
rectified by the recipient in his valid return
for the month in which discrepancy is
communicated shall be added to the output
tax liability of the supplier, in such manner
as may be prescribed, in his return for the
month succeeding the month in which the
discrepancy is communicated.

(6) The amount in respect of any
reduction in output tax liability that is
found to be on account of duplication of
claims shall be added to the output tax
ability of the supplier in his return for the
month in which such duplication is
communicated.

(7) The supplier shall be eligible
to reduce, from his output tax liability, the
amount added under sub-section (5) if the
recipient declares the details of the credit
not in his valid return within the time
specified in sub-section (9) of section 39.

(8) A supplier in those output tax
liability any amount has been added under
sub- section (5) or sub-section (6), shall be
liable to pay interest at the rate specified
under sub-section (1) of section 50 in
respect of the amount so added from the
date of such claim for reduction in the
output tax liability till the corresponding
additions are made under the said subsections.

(9) Where any reduction in output
tax liability is accepted under sub-section
(7), the interest paid under sub-section (8)
shall be refunded to the supplier by
crediting the amount in the corresponding
head of his electronic cash ledger in such
manner as may be prescribed:

PROVIDED that the amount of
interest to be credited in any case shall not
exceed amount of interest paid by the
recipient.