Constitutional Validity of GSTR-2A and GSTR-2B?

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On our previous article titled 'ITC as per GSTR-2A or GSTR-2B?', we have received multiple queries on what is the constitutional validity of GSTR-2A and 2B? So, today we are going to discuss and answer the same query.

The following clause (aa) has been inserted by Finance Act, 2021 in section 16(2) of CGST Act, 2017. However the same is not yet notified. 

Section 16 - Eligibility and conditions for taking input tax credit. 16. (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,–– .. Inserted vide Finance Act, 2021 [Effective date not yet notified]  (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;

If you have a close look onto the above inserted clause, then there are two important limbs into this. 

1. First one is  - has been furnished by the supplier.

2. Second one is - have been communicated to the recipient.

First limb means that supplier must have filed his return of outward supply (i.e. GSTR-1).

And second limb is that - it has been communicated to the recipient. And we all know that the communication to the recipient is being done by way of either GSTR-2A or GSTR-2B only. There is no other form this this purpose as of now. And since the clause of act is itself not yet effective, therefore the condition of making communication to the recipient is also not effective yet.

As far as the rule 36(4) is concerned, rules can not overpower the Act. And in our opinion, if a particular legislation is not effective in the act itself, then how can rules sustain in the court of law.

NB: The above analysis is for those who can invest time in litigation with department. Other may please follow the GSTR-2A / GSTR-2B as usual to avoid litigation cost & time.

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