Decided 6 September 2023 (interim order). In a writ petition by Hindustan Unilever Limited, the Rajasthan High Court has observed that, as the law now stands, a supplier who wants to reduce its output tax through credit notes must furnish proof that the recipient has reversed the corresponding ITC. This is an interim order: the Court refused interim relief and asked the Union of India to suggest a workable mechanism.
Case at a glance
| Case | Hindustan Unilever Limited v. Union of India |
| Forum | Rajasthan High Court, Jaipur (Justice Manindra Mohan Shrivastava and Justice Praveer Bhatnagar) |
| Case No. | D.B. Civil Writ Petition No. 13617/2023 |
| Date of order | 6 September 2023 (interim) |
| Key provisions | Section 34 CGST Act; omitted section 43 |
| Result | No interim relief; UoI to place a suggested mechanism |
Facts of the case
The petitioner challenged the requirement that, to reduce its tax liability on account of credit notes, it must obtain a certificate or proof from each recipient that ITC has been reversed.
It argued that section 43 of the CGST Act, which earlier required the department to match credit notes with ITC reversals, has been omitted, and that collecting certificates from every customer is practically impossible.
Issue before the High Court
When there is no departmental matching system, who must prove that the recipient has reversed ITC on a credit note?
What the High Court held
- As the department has no statutory obligation to carry out matching, a supplier who claims reduction in tax liability must provide proof of reversal by the recipient.
- The challenge was mainly about workability rather than legality, and the petitioner itself had obtained such proof in some cases.
- No interim order was granted. The Union of India was asked to place an appropriate suggested mechanism before the Court.
Practical takeaways for taxpayers
- When issuing credit notes that reduce output tax, ask the customer for written confirmation of ITC reversal and keep it on file.
- Use the Invoice Management System (IMS) and GSTR-2B data where available to show the recipient's acceptance or reversal.
- Watch for the final judgment in this case; the current position may change.
Frequently asked questions
Is this a final judgment?
No. It is an interim order dated 6 September 2023; the matter was listed for further hearing.
What proof should a supplier keep for credit notes?
A certificate or confirmation from the recipient that the related ITC has been reversed, or equivalent portal evidence.
Facing a similar GST dispute?
GST Folio prepares replies to show cause notices, appeals before the Appellate Authority and GSTAT, refund claims and ITC reconciliations for businesses across India. Call or WhatsApp +91 80513 31315 or email gstfolio@zohomail.in.
This summary is based on the order of the Rajasthan High Court (Jaipur Bench) in D.B. Civil Writ Petition No. 13617/2023. It is general information, not legal advice; the outcome of any case depends on its own facts and the full text of the order.