Madhya Pradesh High Court Holds GST Input Tax Credit Claim Must Be Reconsidered When Valid Invoices Are Supplied

Madhya Pradesh High Court addressed the issue of entitlement to input tax credit under the Goods and Services Tax Act, 2017, in a dispute involving the supply of LPG cylinders by Hindustan Petroleum Corporation Limited (HPCL) to M/s Roopa Gas, represented by its proprietor, the petitioner.

The petitioner, after taking over the business from his late father, faced non-recognition by HPCL as the authorized proprietor, leading to the cessation of LPG supplies. Interim relief was earlier granted by the Court, directing HPCL to continue supplies. Subsequently, with the implementation of GST, the petitioner obtained GST registration in the name of “Roopa Gas”.

The core grievance arose when HPCL issued invoices to the petitioner without mentioning his GSTIN, instead treating him as an “Unregistered Dealer”. This omission prevented the petitioner from claiming input tax credit and filing proper GST returns. The petitioner sought directions for HPCL to issue duplicate invoices reflecting the correct GSTIN for the relevant period.

HPCL contended that the status of the dealership—whether proprietorship or partnership—was sub judice in a pending writ appeal, and that disputes among legal heirs had delayed reconstitution. The Commercial Tax Department clarified that HPCL was responsible for providing correct GST information to enable the petitioner to claim input tax credit.

During the proceedings, the petitioner also challenged a tax demand order issued under Sections 73 and 74 of the GST Act, 2017, which had been passed when the petitioner lacked valid GST invoices. Following a court direction, HPCL supplied all relevant GST invoices, now containing the petitioner’s GSTIN.

The GST Authority submitted that, since the invoices previously did not mention the petitioner’s GSTIN, the supplies were treated as Business to Customer (B2C) transactions, not Business to Business (B2B), and thus did not qualify for input tax credit under Section 16(2)(a) of the CGST Act and Rule 46 of the CGST Rules.

The Court held that, with the supply of valid GST invoices, the petitioner’s claim for input tax credit must be reconsidered. The matter was remitted to the Assistant Commissioner, Sales Tax, Bhopal, to re-examine the proceedings under Section 74 of the GST Act for the period July 2017 to March 2018. The petitioner was permitted to submit a detailed reply along with the newly supplied invoices in response to the show cause notice.

Accordingly, the writ petition was allowed with these directions, and no order as to costs was made.