Goyal Iron And Steel Traders vs. Assistant Commissioner Palam Division CGST Delhi South & Ors.

Held

The Court directed that the present writ petition be treated as a representation to respondent no.1. Respondent no.1 was directed to decide this representation by way of a reasoned order within four weeks. This decision was to be made after providing an opportunity of hearing to the petitioner or its authorized representative. The Court also directed the parties to maintain status quo with regard to the impugned notice dated January 28, 2020, until the representation is decided. The Court did not explicitly rule on the validity of the ITC block or the notice, nor did it decide on the interpretation of Rule 86A or Rule 71, as the matter was remitted for a reasoned decision by the respondent authority. The ratio is that statutory authorities must provide reasoned orders and opportunities for hearing when dealing with representations concerning tax disputes, especially when procedural irregularities are alleged.

Facts

The petitioner, Goyal Iron and Steel Traders, filed a writ petition challenging an Input Tax Credit (ITC) block dated January 25, 2020, and a notice dated January 28, 2020, issued by the Assistant Commissioner, CGST Delhi South. The respondents are the Assistant Commissioner and other revenue authorities. The dispute pertains to the period April 2018 - March 2019, concerning a mismatch between ITC claimed in GSTR-3B and that appearing in GSTR-2A. The petitioner sought to have the GST portal opened for modifications to rectify the mismatch, which allegedly arose due to the failure of Indian Oil Corporation (respondent no.4) to correctly mention the petitioner's GST registration number. Alternatively, the petitioner requested a speaking order on its representation dated August 20, 2020, or reasons for the credit block and an opportunity to file objections.

Key Issues

1. Whether the Input Tax Credit block dated January 25, 2020, was validly imposed without prior notice or a reasoned order, and if the conditions under Rule 86A of the CGST Rules, 2017, were satisfied? (Question of law and fact) 2. Whether the impugned notice dated January 28, 2020, correctly identified the cause of the ITC mismatch, considering the petitioner's submission that it stemmed from respondent no.4's error in classifying the sale as to an unregistered entity, despite the petitioner's GST number being on the invoices? 3. Whether the respondents' actions were contrary to Rule 71 of the CGST Rules, 2017, by not providing a window for respondent no.4 to rectify its mistake? Petitioner's arguments: The ITC block was issued without prior notice or a reasoned order, and Rule 86A conditions were not met. The mismatch was due to respondent no.4's error, which has been admitted. The respondents' approach contravenes Rule 71 by not allowing rectification. Revenue's arguments: The learned senior standing counsel accepted notice and had no objection if the writ petition was treated as a representation to respondent no.1 and disposed of by a reasoned order.