M/S North East Glass Industries vs. The Union Of INDIA
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The petitioner, M/s North East Glass Industries, a partnership firm, is challenging a demand show cause notice dated November 20, 2023, issued by the Assistant Commissioner, CGST, Guwahati. The notice alleges that the petitioner availed Input Tax Credit (ITC) amounting to Rs. 1,47,68,383 for the financial year 2018-2019. The department's review indicated that this ITC was inadvertently availed and should have been highlighted in the GSTR-9 form for scrutiny. The notice implies no presumption of fraud or willful suppression of facts by the petitioner. The petitioner was asked to clarify reasons for the incorrect ITC availment and why the amount, along with interest and penalty, should not be recovered under Sections 73(1), 50, and 73(9) of the Central Goods and Services Tax Act, 2017.
Held
The Court did not decide the substantive issues raised regarding the validity of the demand for ITC, interest, and penalty. Instead, in view of a consensus between the parties, the Court disposed of the writ petition by remanding the matter back to the Assistant Commissioner. The petitioner was directed to file a reply to the show cause notice within one month from the date of the order. Following the filing of the reply, the Assistant Commissioner is to decide the matter in accordance with the law, taking into consideration the petitioner's response. The Court's decision is based on the agreement of the parties to allow the petitioner an opportunity to present their case before the adjudicating authority. No specific findings were made on the merits of the petitioner's claim or the department's allegations.
Key Issues
1. Whether the demand for Input Tax Credit (ITC) amounting to Rs. 1,47,68,383, along with interest and penalty, is legally sustainable when the petitioner claims the returns were filed manually due to an improperly operating GST system during the financial year 2018-2019, as per Section 73(1) of the Central Goods and Services Tax Act, 2017? Petitioner's contention: The petitioner argues that the returns were filed manually because the GST system was not functioning properly at the time, and therefore, the department cannot demand the stated amount. The petitioner relies on the department's own observation that there is no presumption of fraud or willful suppression of facts. Revenue's contention: The Revenue, through the Assistant Commissioner, issued the show cause notice proposing recovery of the ITC, interest, and penalty. The standing counsel for GST suggested that the matter be relegated to the Assistant Commissioner for a decision after the petitioner files a reply.
Sections Cited
Section 73(1), Section 50, Section 73(9)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORDER Date : 22-03-2024 Heard Ms. N Hawelia learned counsel for the petitioners. In the present proceeding the demand show cause notice dated 20.11.2023 is under challenge. The notice reflects that according to the department after review of records they came to learn that the petitioner has availed Input Tax Credit (ITC) amounting to Rs.1, 47,68,383 for the financial year 2018-2019. It is also found in the paragraph 4 of the notice that the department is of the view that the noticee had inadvertently availed ITC during financial year 2018-2019 and such fact ought to have been highlighted in GSTR-9 form in the GST backend system for scrutiny and therefore, it negates any presumption of fraud or willful statement or suppression of fact by the petitioner. Accordingly, the petitioner was asked to clarify the following points: “5.1 : The reason behind the incorrect availment of Input Tax Credit amounting to Rs.1,47,68,383/- (Rupees One Crore Forty Seven Lakh Sixty Eight Thousand and Three Hundred and Eighty Three only) was intimated to the notice but no reply received from their end.
2 Why the aforementioned amount of Input Tax Credit should not be demanded and recovered from the Noticee under section 73(1) of the Central Goods and Services tax, 2017. 5.3 : Why applicable interest on the amount of Central Taxs should not Page No.# 3/3 be demanded and recovered from the Noticee under section 73(1) read with Section 50of the Central Goods and Services Tax, 2017. 5.4: Why penalty should not be imposed on the Noticee under section 73(9) of the Central Goods and Services Tax, 2017. Ms. Hawelia learned counsel for the petitioner challenging such notice urges that there is no dispute that the petitioner has filed return, paid the tax, however, such return was manual inasmuch as at that time the GST system was not properly operating. Therefore, the authority could not have demanded such amount. At this stage Dr. D.N Gogoi, learned standing counsel GST submits that as petitioner has been given an opportunity to explain her case this matter may be relegated to the Assistant Commissioner who has issued notice, by giving an opportunity to the petitioner to reply to the points as envisaged at paragraph 5.1 to paragraph 5. 4. Ms. Hawelia learned counsel submits that for the present she may accept such course of action.
Accordingly in view of the aforesaid consensus, this writ petition stands disposed of with a direction that the petitioner shall file a reply within a period of one month from today and thereafter the Assistant Commissioner shall decide the matter as per law taking note of the reply filed by the petitioner.
JUDGE Comparing Assistant
Reproduced from the public record of the Gauhati High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.