Vivo Mobile India (P.) Ltd. V/s Union of India {HIGH COURT OF ALLAHABAD}

Vivo Mobile India (P.) Ltd. V/s Union of India {HIGH COURT OF ALLAHABAD} :

Date of Order : 05-09-2023

In the case of Vivo Mobile India (P.) Ltd. v. Union of India, the Allahabad High Court dealt with issues related to Input Tax Credit (ITC) under GST and the interpretation of Rule 36(4) of the Central Goods and Services Tax (CGST) Rules, 2017. Here’s a simplified explanation of the case:

1. Background: Vivo Mobile India (P.) Ltd. had purchased various components for mobile phones from different suppliers between February 2020 to August 2020. The company claimed Input Tax Credit (ITC) on these purchases. However, the Deputy Commissioner alleged that Vivo Mobile India had availed excess ITC, violating Rule 36(4) of the CGST Rules, 2017, which pertains to the conditions for availing ITC.
2. Contentions: The revenue authorities relied on Circular No. 123/42/2019-GST dated 11-11-2019, which required a month-to-month reconciliation of ITC based on GSTR-3B and GSTR-2A filings. The petitioner argued that this approach was incorrect. They contended that for the period from February 2020 to August 2020, the ITC should be considered cumulatively rather than on a month-to-month basis. They emphasized that the cumulative adjustment should be allowed at the time of filing the return for September 2020.
3. Court’s Decision: The High Court held that the reliance on Circular No. 123/42/2019-GST was misplaced. A circular, according to the court, is an administrative instruction meant to facilitate the implementation of statutory laws, not to override them. The court interpreted Rule 36(4) in light of the first proviso, which allows for cumulative adjustment of ITC for specified periods. It ruled that once the petitioner was allowed to claim a cumulative adjustment for the earlier period while filing the return for a later period (September 2020 in this case), the cumulative effect of eligible ITC should be considered based on the date of filing the return for the later period.
4. Legal Implications: This decision clarifies the application of Rule 36(4) of the CGST Rules, 2017, particularly concerning the timing and methodology for availing ITC. It underscores that while monthly filings like GSTR-1 and GSTR-3B are essential for compliance, the calculation of eligible ITC can be cumulative for certain periods as per the first proviso to Rule 36(4).

1. Conclusion: The judgment emphasizes adherence to statutory provisions and the importance of interpreting rules in a manner that aligns with legislative intent. It highlights the need for clarity in administrative guidelines like circulars and their compliance with statutory provisions under GST law.

This case sets a precedent for businesses regarding the proper methodology for availing and adjusting Input Tax Credit under GST, ensuring compliance with legal requirements while acknowledging provisions that allow for cumulative adjustments over specific periods.