Nirmala Metallics PVT. LTD. vs. State Of Chhattisgarh

Held

The High Court held that given the explicit guidelines issued by the CBIC for recovery of outstanding dues in cases where the first appeal has been disposed of and the Appellate Tribunal is not yet operational, there was nothing further for adjudication in the writ petitions. The Court found that the petitioner's prayer to avail the alternative recovery mechanism by filing an undertaking/declaration in terms of the circulars dated July 11, 2024, and September 17, 2025, was appropriate. Accordingly, liberty was granted to the petitioner to comply with the conditions stipulated in Circular No. 224/18/2024-GST dated July 11, 2024. This included filing an undertaking with the jurisdictional proper officer, declaring their intent to file an appeal against the order under challenge before the Appellate Tribunal once it becomes operational, within the timelines specified in Section 112 of the CGST Act and the notification dated September 17, 2025. The petitioner was also directed to pay the pre-deposit amount as per sub-section (8) of Section 112 of the CGST Act within 15 days from the receipt of the order, if not already deposited. Upon fulfillment of these conditions, the recovery of the remaining amount of the confirmed demand would remain stayed, as per sub-section (9) of Section 112 of the CGST Act. The Court clarified that if the amount was not deposited within the specified period, the order would lose its efficacy. The writ petitions were disposed of with these directions.

Facts

The petitioner, Nirmala Metallics Pvt. Ltd., filed two writ petitions challenging an order dated November 9, 2021, passed by the Joint Commissioner (Appellate) and a DRC-13 dated April 7, 2022, issued by the Assistant Commissioner. The petitioner sought to set aside these orders and sought directions to grant the benefit of Input Tax Credit (ITC) for transactions with M/s United Ispat (in WPT No. 170 of 2022) and M/s S.M. Steel Trader (in WPT No. 171 of 2022). The core of the dispute revolves around the petitioner's eligibility for ITC and the subsequent demand notices. The procedural history indicates that the appellate authority's order was passed, and a demand notice followed, leading to the present writ petitions before the High Court.

Key Issues

1. Whether the petitioner is entitled to the benefit of Input Tax Credit (ITC) for transactions undertaken with M/s United Ispat and M/s S.M. Steel Trader, as claimed by the petitioner? 2. Whether the order dated November 9, 2021, passed by the Joint Commissioner (Appellate) and the DRC-13 dated April 7, 2022, issued by the Assistant Commissioner, are in violation of the CGST Act, 2017, warranting their setting aside? Petitioner's Contentions: The petitioner argued that the Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 224/18/2024-GST dated July 11, 2024. This circular provides guidelines for the recovery of outstanding dues when the first appeal has been disposed of, and the Appellate Tribunal is not yet constituted. The petitioner highlighted that as per paragraph 4 of the circular, taxpayers can make pre-deposit payments to avail stay on recovery of the remaining demand. They also referred to a prior circular dated December 3, 2019, extending limitation periods. The petitioner further submitted that they are willing to file an undertaking with the jurisdictional officer to file an appeal before the Tribunal once it is operational, as per paragraphs 5 and 6 of the July 11, 2024 circular. They also cited Notification No. S.O. 4220(E) dated September 17, 2025, which specifies appeal timelines. The petitioner sought liberty to avail these alternative recovery mechanisms. Revenue's Contentions: The learned State Counsel did not oppose the prayer made by the petitioner.