GST Portal Rule Changes Spark Taxpayer Confusion in Indore
The Madhya Pradesh Tax Law Bar Association has formally requested clarity from the state tax department regarding recent modifications to the Goods and Services Tax (GST) portal's rules for utilizing input tax credit (ITC) to pay integrated goods and services tax (IGST) dues. These changes have reportedly left numerous taxpayers in a state of confusion and uncertainty.
Memorandum Highlights Portal Inconsistencies
In a memorandum submitted to the commercial tax and state GST authorities in Indore on Friday, the association detailed how frequent alterations in GSTN advisories and corresponding adjustments to the portal functionality have created significant ambiguity in return filing processes. The association president, advocate A K Lakhotia, emphasized that the inconsistency between portal behavior and advisory updates has particularly troubled taxpayers who filed returns based on the system's functionality at specific points in time.
Sequence of Events Leading to Confusion
The Central GST Act establishes a clear statutory order for utilizing ITC to offset IGST liability, prioritizing Central GST (CGST) credit over State GST (SGST). However, a GSTN advisory issued on January 30, 2026, permitted taxpayers to use CGST and SGST ITC against IGST liability in any order they preferred. The portal was subsequently aligned with this advisory for February 2026 filings.
The confusion escalated when, with the March 2026 return filings, the portal unexpectedly reverted to the earlier statutory sequence without clear communication. Compounding the issue, the earlier advisory was edited on the portal, leaving taxpayers uncertain about the validity of returns they had already submitted based on the previous rules.
Key Demands from the Tax Law Bar Association
The association has put forth several critical requests to the authorities:
- Treat all ITC utilization conducted in February 2026 as valid and legally acceptable.
- Apply any future rule changes only on a prospective basis, not retroactively.
- Provide protection for taxpayers from any demands, interest charges, or penal actions arising from this specific portal and advisory inconsistency.
Call for Uniform Guidelines and Future Clarity
Advocating for the issuance of a clear, official circular, the association stressed that uniform guidelines are essential to prevent similar disputes in the future. Such measures would ensure taxpayers can fully utilize their available input tax credit without facing ambiguity in the adjustment sequence across IGST, CGST, and SGST categories. The association's intervention highlights the need for stable, transparent communication between tax authorities and the taxpayer community to maintain compliance confidence and system reliability.
