Laksh Natural Stones Private Limited vs. Union Of INDIA
Original PDF →Facts
The petitioner, Laksh Natural Stones Private Limited, filed a writ petition challenging an intimation of tax ascertained as payable under Section 73(5) or Section 74(5) of the CGST Act. This intimation advised the petitioner to pay the ascertained tax along with interest, failing which a show cause notice would be issued under Section 73(1) of the CGST Act. The petitioner was also given an opportunity to file submissions against the proposed ascertainment. The petitioner argued that the authorities had prematurely issued the notice while the issue of carrying forward CENVAT credit under Section 140 of the CGST Act read with Rule 117 of the CGST Rules was pending before the Supreme Court and other High Courts, some of which had held that the time period for availing this benefit could be relaxed. The respondents contended that the ascertainment was prima facie and not final, and the petitioner could raise all grounds before the authorities.
Held
The Court held that the issue of the petitioner's entitlement to carry forward CENVAT credit under Section 140 of the CGST Act is dependent on compliance with various legal provisions. The question of whether a delayed or defective application for carry forward CENVAT credit deserves to be condoned is a matter for the authorities to consider. Since the authorities had not yet taken a final decision and had only provided the petitioner an opportunity to file a representation against the proposed ascertainment, the Court was of the view that the petitioner should approach the authorities first. The Court refrained from commenting on the merits of the case. The petitioner was directed to submit a fresh representation within 30 days, which the respondents were to consider and decide in accordance with the law before taking any further steps.
Key Issues
1. Whether the authorities acted prematurely in issuing an intimation of tax ascertained under Section 73(5)/74(5) of the CGST Act when the issue regarding the condonation of delay in availing CENVAT credit under Section 140 of the CGST Act read with Rule 117 of the CGST Rules is pending before higher courts? Petitioner's Argument: The petitioner argued that the authorities had hastened to issue the notice while the matter was pending before the Supreme Court in the case of Brand Equity Treaties Limited Vs. The Union of India and Ors., and other High Courts. They contended that some High Courts have taken the view that the period for availing carry forward benefit under Section 140 of the CGST Act read with Rule 117 of the CGST Rules is not mandatory and can be relaxed in appropriate cases. Respondents' Argument: The respondents submitted that the authorities had conducted a prima facie ascertainment, which was not final. They pointed out that the impugned communication advised the petitioner to pay the tax but also provided an opportunity to file submissions against the ascertainment, indicating that it had not attained finality. They further argued that the petitioner could raise all their grounds before the authorities, who would consider and decide them.
Sections Cited
Section 73, Section 74, Section 140, Rule 117
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
Order 02/03/2022 Heard. Though the case is listed for orders on application for vacating the stay, having heard the learned counsel for the parties at length, we find that the present petition can be disposed off at this stage. The writ petition has been filed by the petitioner challenging an intimation of tax ascertained as being payable under Section (2 of 3) [CW-10497/2020] 73(5) - Section 74(5) of the Central Goods and Services Tax Act, 2017 (for short 'the CGST Act') by which while advising the petitioner to pay the amount of tax as ascertained along with interest etc., it has been stated that in case tax is not paid, show cause notice will be issued under Section 73(1) of the CGST Act. The notice also shows that in case the petitioner wish to file any submission against the proposed ascertainment, the same may be furnished before the authority. At this stage, the petitioner has sought to challenge the action of the respondents mainly on the submission that while the matter is pending for consideration before the Hon'ble Supreme issue, the respondents - authorities have hastened to issue notice to the petitioner. Learned counsel for the petitioner would submit that some of the High Courts have taken view that period within which carry forward benefit is to be availed as provided under Section 140 of the CGST Act read with Rule 117 of the CGST Rules of 2017 is not mandatory in an appropriate case it can be relaxed. Learned counsel for the respondents would submit that the authorities have carried out prima facie ascertainment of the matter, but this decision is not final. Referring to the contents of the ascertainment communication impugned in the petition, learned counsel for the respondent would submit that though the petitioner has been advised to pay amount of tax as ascertained in the notice, he has been given an opportunity to file submissions against the ascertainment which clearly shows that the (3 of 3) [CW-10497/2020] ascertainment is only proposed and has not attained the finality. Counsel submits that the petitioner can raise all the grounds which are being raised by him in this petition against the proposed action of recovery of tax and the authorities will consider it and take decision. Having heard learned counsel for the parties, at this stage, we are of the view that the issue with regard to petitioner's entitlement to carry forward CENVAT credit as provided under Section 140 of the CGST Act is dependent upon the petitioner complying with various provisions under the law. Whether delayed or defective application for carry forward CENVAT credit deserves to be condoned, would be a matter for consideration by the authorities. Where at this stage authorities has not taken any decision on the aspect, but has only given the petitioner opportunity to file representation against proposed ascertainment, we are of the view that the petitioner should approach the authorities first. We refrain from commenting upon the merits of the case. The petitioner may submit fresh representation and submission within a period of 30 days from today. The same shall be considered and decided by the respondents in accordance with law before they proceed to take any further steps. The petition is disposed off accordingly. (ANOOP KUMAR DHAND),J (MANINDRA MOHAN SHRIVASTAVA),J Ritu/46
Reproduced from the public record of the Rajasthan High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.