Tvl.Lourdes Matha Cashew Industries vs. The Union Of INDIA

Held

The Court held that the condition imposed by the respondents, requiring the petitioner to forgo eligible input tax credit for the period from 01.07.2017 to 31.05.2018 as a condition for granting retrospective GST registration, was unreasonable and unsustainable. The Court reasoned that the petitioner was already a VAT assessee and was seeking migration to the GST regime. Input Tax Credit is also available under the VAT regime, and therefore, the petitioner would possess the necessary details and evidence to substantiate their claim for ITC for the period in question. Consequently, there should be no difficulty in availing ITC for the said period. The Court quashed the impugned order to the extent of the fourth condition. The petitioner was directed to furnish details as per conditions 1 to 3, and thereafter, the respondents were to consider the application for migration. The Input Tax Credit was to be granted based on the details and evidence submitted by the petitioner.

Facts

The petitioner, Tvl. Lourdes Matha Cashew Industries, sought to quash a notice dated 16.11.2022 issued by the State Tax Officer. The petitioner, a proprietor engaged in cashew nut sales since 1986, was registered under the Tamil Nadu Value Added Tax (VAT) regime. Upon migration to GST, the petitioner obtained registration in Kerala but faced difficulties in finalizing migration in Tamil Nadu, inadvertently omitting follow-up actions. Registration was eventually granted in Tamil Nadu, but with a validity commencing from 01.06.2018, whereas the tax liability began on 01.07.2017. The petitioner requested retrospective validity from 01.07.2017 to avail input tax credit. The impugned notice proposed to consider this request subject to certain conditions, including an undertaking to forgo eligible input tax credit for the period from 01.07.2017 to 31.05.2018.

Key Issues

1. Whether the condition imposed by the respondents to forgo eligible input tax credit for the period from 01.07.2017 to 31.05.2018, as a prerequisite for granting retrospective GST registration from 01.07.2017, is legal and sustainable? (Question of law) Petitioner's contention: The petitioner argued that they were already VAT assessees and seeking migration to GST, and therefore, should not be compelled to forgo input tax credit (ITC) for the period when tax liability commenced. They contended that they would have the necessary details and evidence to substantiate their ITC claims from the VAT regime. The condition to forgo ITC was unreasonable and illegal. Respondents' contention: The respondents argued that if the validity of registration was being granted retrospectively, the petitioner ought to forgo the input tax credit for the period prior to the granted registration. The impugned notice was issued by the State Tax Officer.