Tamara Leisure Experiences vs. The Deputy Commissioner Of
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Cause title — parties, addresses and appearances
ORAL ORDER In this petition, the petitioner has sought for the following reliefs: (i) Quashing the impugned order dated 24.09.2024 bearing No.DRC-07/71/DCCT (A)-3.8/2024-25 issued by Respondent No.1 under Section 73 of the Karnataka Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017 for the tax period April 2021 to March 2022 (Annexure 'A'); (ii) Quashing the impugned Summary in Form GST DRC 07 dated 26.09.2024 bearing Reference No. ZD290924059002C issued by Respondent No. 1 under Section 73 of the Karnataka Goods and Services Tax Act, 2017 and the Central Goods and Service Tax Act, 2017 for the tax period April 2021 to March 2022 (Annexure 'A-1'); (iii) Declaring that the input tax credit of Rs.19,27,826/- claimed by the Petitioner under Section 17(5) of the Karnataka Goods and Services Tax Act, 2017 and the Central Goods and Service Tax Act, 2017 for the tax period April 2021 to March 2022 is on inputs and input services used by it towards and in the course of and furtherance of its business for the primary purpose of construction of property which was essential for the supply of its outward supplies as such outward supplies were indisputably provided from and on such NC: 2025:KHC:11666 property, and thus not restricted under Section 17(5) of the Acts; Alternatively to (i) to (iii) above, (iv) Allowing the rectification letter dated 08.10.2024 (Annexure 'B') filed by the Petitioner and, accordingly, set aside the impugned order dated 24.09.2024 bearing No. DRC-07/71/DCCT (A)- 3.8/2024-25 (Annexure A) and impugned Summary in Form GST DRC 07 dated 26.09.2024 bearing Reference No. ZD290924059002C (Annexure A-1), and consequently direct the Respondent No. 1 to reconsider the matter in the light of the Hon'ble Supreme Court's decision in the case Safari Retreats, and thereafter direct the 1st Respondent to pass orders permitting the Petitioner to utilize the ITC of Rs.19,27,826/- rightly availed by it during the subject tax periods; Alternatively to (i) to (iv) above, (v) permitting the Petitioner to file an appeal under Section 107 of the Karnataka Goods and Services Tax Act, 2017 and the Central Goods and Service Tax Act, 2017, against the impugned order dated 24.09.2024 bearing No. DRC-07/71/DCCT (A)- 3.8/2024-25 (Annexure A) and impugned Summary in Form GST DRC 07 dated 26.09.2024 bearing Reference No. ZD290924059002C (Annexure A-1), and direct that the appeal be heard, considered and NC: 2025:KHC:11666 disposed off by the first appellate authority on merits and in accordance with law, without raising the issue of limitation; Without prejudice to (i) to (v) above and in any event, (vi) Quashing the notice dated 24.01.2025 bearing NO. DGSTO-3/DCCT(Audit)-3.8/T.No.286/2024-25 issued by the 1st Respondent to the 4th Respondent under Section 79(1)(c) of the Karnataka Goods and Services Tax Act, 2017 and the Central Goods and Service Tax Act, 2017 (Annexure 'D'); (vii) Directing Respondent No. 1 to forthwith refund the amount of Rs. 19,86,388 (comprising Rs.19,27,826/- being the entire disputed tax and Rs. 58,562/- of the disputed penalty) which was improperly and illegally appropriated from the Electronic Cash Ledger of the Petitioner on 22.01.2025 (Annexure 'C'), to the Petitioner together with interest thereon; (viii) Directing Respondent No. 1 to forthwith refund the amount of Rs.1,34,221/-, being the balance portion of the disputed penalty, which was improperly and illegally withdrawn from the Petitioner's Account No.32431914257 maintained with the 4th Respondent on 30.01.2025, to the Petitioner together with interest thereon; and (ix) Pass such order or further orders as this Hon'ble Court may deem fit in the facts and circumstances of the case, and in the interests of justice and equity. NC: 2025:KHC:11666
Heard learned counsel for the petitioner, learned HCGP for respondent Nos.1 to 3 and perused the material on record.
A perusal of the material on record will indicate that pursuant to the show-cause notice dated 20.08.2024 in Form GST DRC-01 issued by respondent No.1 to the petitioner and petitioner submitted reply dated 03.9.2024. Respondent No.1 passed impugned order under Section 73(9) of the Central Goods and Services Tax Act/Karnataka Goods and Services Tax Act, 2017 (for short ‘CGST/KGST Act, 2017’). Subsequently, since the claim of the petitioner was said to be upheld by the Hon’ble Apex Court in rectification/revisiting the said impugned order on the ground that the Hon’ble Apex Court has upheld claim of the petitioner and consequently, impugned order deserves to be rectified. It is a matter of record that the said rectification application is still pending NC: 2025:KHC:11666 before respondent No.
However, respondent No.1 proceeded to appropriate the entire tax demand at Rs.19,27,826/- and portion of penalty in a sum of Rs.58,562/- on 22.01.2025 and also issued garnishee notice to respondent No.4 - State Bank of India dated 24.01.2025 in a sum of Rs.1,34,221/- said to be due from the petitioner, which was recovered from respondent No.4 on 28.01.2025. Under these circumstances, the petitioner is before this Court, seeking the aforesaid reliefs.
Per contra, learned HCGP submits that there is no merit in the petition and the same is liable to be dismissed.
A perusal of the material on record would indicate that the judgment of the Hon’ble Apex Court in the case of Safari Retreats (P.) Ltd., (supra) was not considered by respondent No.1 in the impugned order and as such, it would be necessary and I deem it just and appropriate to set aside the impugned order and remit back the matter to respondent No.1 for re-consideration afresh in accordance with law bearing in mind the judgment of the Safari Retreats (P.) Ltd., (supra).
In addition thereto, since the respondents have recovered total sum of Rs.21,20,609/- from the petitioner during the NC: 2025:KHC:11666 pendency of the rectification application and without disposing of the rectification application which was filed within a prescribed period, coupled with the fact that in the event the petitioner unsuccessful after remand pursuant to the present order, the petitioner have to pay only 10% along with the appeal to be preferred under Section 107 of the CGST/KGST Act, 2017, I deem it just and appropriate to direct the concerned respondents to refund a sum of Rs.19,27,826/-, which would constitute and represent 90% of the amount recovered by the respondents from the petitioner immediately without any delay.
In the result, I pass the following: ORDER (i) Writ Petition is hereby allowed; (ii) Impugned order and summary at Annexures-A and A1 are hereby set aside; (iii) Matter is remitted back to the concerned respondents for re-consideration afresh in accordance with law; NC: 2025:KHC:11666 (iv) Concerned respondents are directed to refund a sum of Rs.19,27,826/- back to the petitioner immediately without any delay and at any rate within a period of one week from the date of receipt of coy of this order. (S.R.KRISHNA KUMAR) JUDGE SMJ
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.