M/S. Toyota Logistics Kishor INDIA PVT. LTD. vs. Union Of INDIA
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Cause title — parties, addresses and appearances
ORAL ORDER
In this petition, petitioner seeks the following reliefs: a) Issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ or order or direction under Article 226 of the Constitution of India quashing the impugned Show Cause Notice No.18/2023-24 ADC dated 28.09.2023 issued by the respondent No.3 enclosed at Annexure – A demanding input tax credit availed by the Petitioner along with interest and penalty;
b) Hold that the Petitioner has rightly availed input tax credit of Rs.1,30,28,404/- in respect of the IGST paid on manpower supply services received by the petitioner during the period April 2019 to November 2022. c) Hold that the Respondent No.3 has arbitrarily issued the impugned Show Cause Notice No.18/2023-24 ADC dated 28.09.2023 enclosed at NC: 2024:KHC:34733 Annexure – A by erroneously invoking Section 74 of the CGST Act, 2017 / KGST Act, 2017; d) Pass such further order(s) and other reliefs as the nature and circumstances of the case may require.
The petitioner is involved in the business of providing goods, transport agency services for completely built units and knocked down parts of motor vehicles in different routes throughout India and is registered under the Karnataka Goods and Services Act, 2017 (for short, `KGST Act').
The respondents are the Central GST Authorities under CGST Act. The petitioner seeks quashing of the impugned Show Cause Notice at Annexure — A dated 28.09.2023 issued by the respondent No.3 and for other reliefs.
Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.
In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner submits that the demand made by the respondents in the impugned Show Cause Notice was illegal, arbitrary and without juri iction or authority of law and opposed to the statutory provisions. NC: 2024:KHC:34733
The learned counsel for the petitioner submits that the impugned Show Cause Notice proposes to raise two demands:
(i) Demand of Rs.1,68,04,057/- being IGST payable on the taxable manpower supply services received by the Petitioner during the period July 2017 to November 2022, along with interest; and (ii) Demand of Rs.1,30,28,404/- being input tax credit availed on manpower supply services received during the period April 2019 to November 2022. 7. In regard to the first demand, the learned counsel for the petitioner submits that the impugned Show Cause Notice deserves to be quashed on the ground that proceedings were initiated by the State GST Authorities vide Show Cause Notice dated 12.05.2023 which culminated in an adjudication Order-In-Original dated 07.08.2023 which was thereafter set aside by the Appellate Authority vide Order dated 05.03.2024. The learned counsel for the petitioner submits that since the State GST Authorities had initiated the proceedings first, the impugned Show Cause Notice issued by the Central GST Authorities to the extent of demand of IGST in terms of Section 6(2)(b) of the CGST Act, 2017 deserves to be quashed. NC: 2024:KHC:34733
With regard to the second demand, the learned counsel for the petitioner submits that the admissibility of input tax credit is covered by the Circular No. 211/5/2024-GST dated 26.06.2024 issued by the Karnataka and others - 2024 VIL-828-KAR, and Musashi Autoparts Private India Ltd., Vs. State of Karnataka - W.P.No.478/2024 dated 29.07.2024. 9. It is further submitted that the demand of interest on both the demands is not sustainable in view of the provisions of section 128A and section 13(3)(c) of the CGST Act.
Per contra, learned counsel for the respondents submits that if the petitioners submit a reply along with necessary documents to the impugned Show Cause Notice at Annexure — A, the concerned respondents would consider the same and proceed further in accordance with law.
A perusal of the material on record and the submissions made by both sides will clearly indicate that prior to issuance of the impugned Show Cause Notice dated 28.09.2023 at Annexure — A, the State GST Authorities had already initiated proceedings as NC: 2024:KHC:34733 against the petitioner proposing to demand IGST and consequently, in light of Section 6(2)(b) of the CGST Act, 2017, which contemplates a complete bar / embargo on the Central GST Authorities to initiate proceedings in a situation where the State GST Authorities had already initiate proceedings as against the petitioner on the same subject matter, I am of the considered view that the impugned Show Cause Notice at Annexure — A to extent of demand of IGST of Rs.1,68,04,057/- along with interest in the light of of Karnataka and others - 2024 VIL-828-KAR, and Musashi Autoparts Private India Ltd., Vs. State of Karnataka - W.P.No.478/2024 dated 29.07.2024 and the Circular No. 211/5/2024-GST dated 26.06.2024 issued by the Central Board of Indirect Taxes and Customs, New Delhi. In my view, the input tax credit has been validly availed in terms of the decisions and Circular referred to supra. NC: 2024:KHC:34733
In view of the aforesaid facts and circumstances, I deem it just and appropriate to dispose of this petition by issuing certain directions.
In the result, I pass the following: ORDER (i) Petition is hereby disposed of. (ii) The impugned Show Cause Notice at Annexure — A dated 28.09.2023 issued by the Respondent No. 3 to the extent of demand of IGST of Rs.1,68,04,057/- along with interest in terms of Section 6(2)(b) of the CGST Act, 2017 is hereby quashed; (iii) The petitioner is reserved with liberty to submit a reply along with documents to the impugned Show Cause Notice at Annexure — A dated 28.09.2023 to the extent of demand of input tax credit of Rs.1,30,28,404/- along with interest, within a period of three weeks from the date of receipt of a copy of this order. NC: 2024:KHC:34733 (iv) The concerned respondents shall consider the said reply and documents to be submitted by the petitioner and proceed further in accordance with law after providing sufficient and reasonable opportunity of hearing to the petitioner and bearing in mind the observations made in this order as well as the relevant statutory provisions, Circulars, judgments, contentions, etc., relied upon by the petitioner and pass appropriate orders within a period of four weeks from the date of receipt of the Reply to be filed by the petitioner. (S.R.KRISHNA KUMAR) JUDGE
MDS / SV List No.: 2 Sl No.: 7
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.