M/S.Thirumagal Dyeing Works vs. Joint Commissioner Of GST And Central Excise

Held

The Court held that the demand raised in item No.3 of the DRC-07 notice, concerning the wrongly availed ITC of Rs.3,76,67,083/-, was wholly erroneous. The 1st respondent, in its order dated 17.10.2023, had made a factual finding that the petitioner had reversed this wrongly availed ITC in their GSTR-3B for February 2020 and ordered it to be treated as payment under Section 73 of the CGST Act, 2017. The Court found the revenue's submission that the portal did not permit such reversal to be unacceptable. The Court reasoned that when the 1st respondent had already made such an order, the 2nd respondent ought not to have included the said amount in the DRC-07 notice. Therefore, the demand under item No.3 of the impugned DRC-07 notice was set aside. For other claims, the petitioner was granted liberty to pursue amnesty options.

Facts

The petitioner, M/s. Thirumagal Dyeing Works, filed a writ petition challenging an Order-in-Original No.16/2023-GST dated 17.10.2023 passed by the Joint Commissioner of GST and Central Excise (1st respondent) and a consequential DRC-07 notice dated 15.05.2024 issued by the Assistant Commissioner (2nd respondent). The DRC-07 notice included a demand for an amount that the petitioner claimed had been reversed as wrongly availed Input Tax Credit (ITC) in their GSTR-3B for February 2020, which was subsequently ordered by the 1st respondent to be treated as payment under Section 73 of the CGST Act, 2017. The petitioner also indicated an intention to invoke an amnesty scheme for other demands.

Key Issues

1. Whether the demand raised in the DRC-07 notice for the amount of Rs.3,76,67,083/-, which was already ordered by the 1st respondent to be treated as payment under Section 73 of the CGST Act, 2017, is erroneous, thereby violating the findings of the 1st respondent? (Question of law and fact, turning on Section 73 of the CGST Act, 2017). Petitioner's contention: The DRC-07 notice is erroneous as it re-demands an amount that the 1st respondent had already determined to be reversed and treated as payment under Section 73 of the CGST Act, 2017. The petitioner relies on the 1st respondent's own order dated 17.10.2023. Revenue's contention: There is no error in the demand notice. Even if there was a wrong demand, the petitioner should have filed an appeal. The portal does not have a provision to enter or adjust amounts already paid/reversed. The respondents rely on various provisions of the GST Act, 2017, and the judgment in Asstt.Commr. (CT) LTU, Kakinada Vs. Glaxo Smith Kline Consumer Health Care Ltd. (2020) to argue that the writ petition is not maintainable.