RCM on general URD purchases was suspended via Notification 38/2017-CT(R) w.e.f. 13.10.2017 and has never been revived. Yet ASMT-10 notices continue because the GSTN automated engine flags any purchase not in GSTR-2B without filtering for URD category.
GSTN risk engine flags purchases not in GSTR-2B without checking URD category. No officer discretion — fully automated. System does not distinguish Sec 9(3) notified vs ordinary URD purchases.
Officers compare purchase ledger in GSTR-9/3CD with GSTR-3B without verifying RCM applicability. Treating all unmatched purchases as taxable supply — legally incorrect for URDs.
Officers confuse URD general supply (9(4) — suspended) with specific notified categories (9(3) — always applicable: GTA, legal services, import of services). Result: wrong demand.
Annual return Table 8H reports "Supplies from unregistered persons" which automatically populates scrutiny dashboards triggering ASMT notices even for fully suspended categories.
AI Tool Application: Auto-classify each URD purchase as Sec 9(3) notified vs ordinary URD → auto-draft ASMT-11 citing Notification 38/2017 → auto-calculate contingent liability for FS notes.
From Supreme Court to multiple High Courts: ITC cannot be denied solely on GSTR-2A/2B mismatch if valid tax invoice exists and goods/services were received. Burden shifts to the defaulting supplier — not the buyer.
SC dismissed Revenue's SLP. ITC cannot be denied if recovery from supplier is still possible. Buyer is a bona fide purchaser. GSTR-2A is facilitative only — not conclusive for ITC eligibility.
ITC availed on basis of books on self-assessment basis. GSTR-2A is a portal facilitation tool. Return filing is assessee's independent obligation under Sec 59 — not portal-dependent.
ITC reversal set aside — adjudicating authority failed to follow mandatory Circular 183/15/2022 procedure. Officers cannot pass mismatch orders without first following this circular.
ITC not rejectable merely because credit note not in GSTR-1. CA Certificate rejection without reasons = bad in law. Documents + certificate = sufficient to prove ITC eligibility.
| Period | ITC Matching Rule | Legal Position | Defence |
|---|---|---|---|
| FY 2017-18 & 2018-19 | No matching rule applicable | Circular 183 covers this period | Full ITC if Sec 16(2) met |
| Oct 2019 – Jan 2022 | Rule 36(4): 5% buffer over 2A | Only excess over buffer at risk | Buffer available as shield |
| Jan 2022 onwards | Rule 36(4): 100% GSTR-2B match | Strict 2B linkage enforced | Careful reconciliation needed |