Section 155 ITC burden-of-proof — defence checklist (19 items) □ Comprehensive ITC documentation maintained per invoice □ Payment evidence to supplier within 180 days documented □ Supplier GST registration verification at portal preserved…
155
Section 155 ITC burden-of-proof — defence checklist (19 items) □ Comprehensive ITC documentation maintained per invoice □ Payment evidence to supplier within 180 days documented □ Supplier GST registration verification at portal preserved…
Section 155 ITC burden — of-proof — defence checklist (19 items)
Section 155 ITC burden-of-proof — defence checklist (19 items)
□ Comprehensive ITC documentation maintained per invoice
□ Payment evidence to supplier within 180 days documented
□ Supplier GST registration verification at portal preserved
□ Supplier GSTR-1 filing showing invoice verified
□ GSTR-2B reconciliation completed monthly
□ Books of account reconciliation maintained
□ Blocked-credit exclusion documentation prepared (for s. 17(5) categories)
□ Periodic supplier-compliance audits conducted
□ On SCN — specific allegation analysis completed
□ Bona-fide-compliance documentation for supplier-default scenarios assembled
□ Suncraft Energy / D.Y. Beathel jurisprudence arguments prepared
□ Hindustan Steel bona-fide-belief defence for penalty mitigation prepared
□ Vatika Township beneficial interpretation arguments framed
□ Bharti Airtel portal-data sanctity arguments framed
□ Filco framework arguments for transitional ITC disputes prepared
□ Procedural defects in SCN catalogued under Mafatlal
□ Senior tax counsel engaged for high-value matters
□ Industry-body coordination for systemic issues established
□ Appellate strategy with focused grounds prepared
Worked examples — five live scenarios
Example 1 — Supplier-default ITC denial defence
Facts: A Ltd's supplier B defaulted on GST payment; Department denies A's ITC of Rs. 15 lakh under s. 16(2)(c) + s. 155.
Step 1: Documentary evidence — A's invoice, payment to B, B's registration at time of supply.
Step 2: B's GSTR-1 showed the invoice; A's GSTR-2B reflected it.
Step 3: A's bona-fide compliance at time of claim demonstrated.
Step 4: Suncraft Energy / D.Y. Beathel — recovery from B, not reversal of A's ITC.
Step 5: Adjudication accepts A's burden discharge.
Result: ITC defended on bona-fide-compliance and jurisprudence anchors. Demonstrates supplier-default defence framework.
Example 2 — Invoice-defect-based denial
Facts: C Pvt Ltd's invoice from D had clerical defect in HSN code; Department denies ITC.
Step 1: Invoice substantively complete — supplier, recipient, value, tax all correct.
Step 2: Clerical HSN defect — does not affect substantive eligibility.
Step 3: Plead Vatika Township beneficial interpretation.
Step 4: Plead s. 16 substantive compliance.
Step 5: Adjudication accepts substantive compliance.
Result: Substantive defence succeeds. Demonstrates the substance-over-form framework.
Example 3 — Blocked-credit dispute
Facts: E Industries claimed ITC on motor vehicle; Department denies under s. 17(5)(a).
Step 1: Verify use case — vehicle for transportation of goods (s. 17(5)(a) exception applies).
Step 2: Documentary evidence — vehicle use records, logbook, business use.
Step 3: Plead s. 17(5)(a) exception explicitly.
Step 4: Adjudication accepts exception applicability.
Result: Exception-driven defence succeeds. Demonstrates blocked-credit-exception framework.
Example 4 — GSTR-2B mismatch dispute
Facts: F Ltd's claimed ITC exceeded GSTR-2B by Rs. 5 lakh; Department denies excess.
Step 1: Reconcile difference — supplier's late GSTR-1 filing caused mismatch.
Step 2: Supplier subsequently filed; GSTR-2B updated.
Step 3: Plead s. 16(2)(aa) substantive compliance.
Step 4: Plead Bharti Airtel portal-data sanctity for updated GSTR-2B.
Result: Mismatch defence succeeds through subsequent reconciliation. Demonstrates GSTR-2B reconciliation framework.
Example 5 — Transitional ITC dispute
Facts: G Industries' transitional ITC under s. 140 disputed under s. 155 burden.
Step 1: Pre-GST documentation assembled — CENVAT ledger, returns, invoices.
Step 2: Post-GST eligibility verified — s. 16 conditions.
Step 3: Plead Vatika Township + Filco Trade Centre framework.
Step 4: Mafatlal procedural framework arguments.
Result: Transitional ITC defended through comprehensive documentary evidence + jurisprudence anchors. Demonstrates transitional ITC defence framework.
Planning and litigation strategy
• Build comprehensive ITC documentary discipline as standard compliance practice.
• Conduct periodic supplier-compliance audits.
• Maintain monthly GSTR-2B vs books reconciliation.
• Train compliance team on ITC framework discipline.
• Build supplier-vetting framework for new vendor relationships.
• Monitor HC jurisprudence developments on supplier-default ITC.
• Engage with industry bodies for framework advocacy.
• Maintain Cross-Commissionerate intelligence on ITC dispute trends.
• Build a precedent track record of ITC dispute outcomes.
• For blocked-credit categories, maintain use-case documentation.
• Coordinate with finance function on payment-discipline (180-day rule).
• Periodic compliance audits to identify ITC vulnerabilities.
• For high-value ITC claims, engage tax counsel for advance review.
• Document each ITC dispute outcome for institutional learning.
• For multi-State operations, coordinate ITC compliance State-by-State.
Litigation defence
• Frame ITC defence with comprehensive documentary evidence.
• Anchor procedural fairness in Mafatlal.
• Anchor bona-fide-belief defence in Hindustan Steel.
• Anchor beneficial interpretation in Vatika Township.
• Anchor portal-data sanctity in Bharti Airtel.
• Anchor transitional ITC defence in Filco Trade Centre framework.
• For supplier-default cases, anchor in Suncraft Energy / D.Y. Beathel HC line.
• Demand specific allegation in SCN.
• Verify Department's underlying analysis methodology.
• Cross-examine departmental witnesses on factual findings.
• On adjudication, audit for s. 75(7) compliance.
• On appeal, frame grounds tightly — documentary, procedural, interpretive.
• For high-value matters, evaluate higher appellate routes.
• Coordinate with industry bodies for systemic challenges.
• Document each ITC dispute outcome for institutional learning.
• Engage with Department's senior tier on principled issues.
Cross-references
• Section 16 — Eligibility and conditions for ITC — substantive framework.
• Section 17 — Apportionment / blocked credits — substantive framework.
• Section 18 — Availability of credit in special circumstances.
• Section 19 — Job-work credit.
• Section 20 — ISD distribution.
• Section 21 — Recovery of excess ISD credit.
• Section 39 — Furnishing of returns.
• Section 41 — Availment of ITC.
• Section 49 — Payment of tax — electronic credit ledger.
• Section 73 — Determination (non-fraud).
• Section 74 — Determination (fraud).
• Section 75 — General provisions.
• Section 78 — Recovery of tax — operative for supplier-default recovery.
• Section 79 — Recovery modes.
• Section 107 — Appeals to AA.
• Section 122 — Penalty for certain offences.
• Section 132 — Prosecution.
• Section 140 — Transitional ITC.
• Section 161 — Rectification of errors apparent.
• Rule 36 — Documentary requirements for ITC.
• Rule 37 — 180-day payment rule.
• Rule 37A — Supplier-default reversal.
• Rule 42 — ITC reversal apportionment.
• Rule 43 — Capital goods ITC apportionment.
• Rule 86 — Electronic credit ledger.
• Rule 86A — Restriction on credit ledger.
• Rule 86B — Restriction on cash-payment use.
• FORM GST GSTR-2B — Auto-drafted ITC statement.
• FORM GST GSTR-1 — Outward supplies (supplier).
• FORM GST GSTR-3B — Monthly return.
• Article 14 of Constitution — equality / proportionality.
• Article 19(1)(g) of Constitution — trade / profession protection.
• Article 226 of Constitution — High Court writ jurisdiction.
• Mafatlal Industries (1997) 5 SCC 536 — procedural safeguards.
• Hindustan Steel (1970) 1 SCR 753 — bona-fide-belief defence.
• Vatika Township (2014) 367 ITR 466 — beneficial provisions construction.
• Bharti Airtel (2021) 11 SCC 374 — portal-data sanctity.
• Filco Trade Centre (2022) SCC OnLine SC 1156 — transitional ITC equitable framework.