M/S Sheuli Rubber Estate vs. The Union Of INDIA And Ors

Held

The Court held that the impugned letter dated 11.03.2025, issued by the Superintendent (Anti-Evasion) CGST, is to be treated as Part A of Form GST DRC-01A, which is a pre-adjudication notice in the nature of an intimation under Section 74(5) of the CGST Act, 2017. The Court noted that no formal proceedings under Section 73(1) or 74(1) for wrongful availment of ITC had been initiated. Following the scheme of Section 74(5) read with Rule 142(1A) and 142(2A), the petitioner is required to either make a partial payment of the communicated amount or file objections in Part B of Form GST DRC-01A. Upon submission of objections, the adjudicating officer must examine their tenability on facts and law before initiating proceedings under Section 73(1) or 74(1). The Court permitted the petitioner to submit all relevant documents, including bank transactions and invoices, with their objections. It also suggested that the adjudicating officer may issue notice to the selling dealer (respondent No.4) if necessary to resolve the dispute. The petition was disposed of with a direction for the petitioner to submit objections within two weeks. The Court explicitly stated it made no observations on the merits of the case.

Facts

The petitioner, M/s Sheuli Rubber Estate, received a notice dated 11.03.2025 from the Superintendent (Anti-Evasion) CGST, Agartala, alleging reversal of Input Tax Credit (ITC) availed against fake ITC from a non-existent entity. The petitioner claims to be a bona fide purchaser who paid taxes to the supplier, M/s Maa Tara Trading, against invoices and filed GSTR-3B returns. The notice demanded reversal of ITC with penalty and interest by 21.03.2025. The petitioner approached the High Court of Tripura challenging this notice. The revenue contended that the notice was an intimation under Section 74(5) of the CGST Act, 2017, allowing the petitioner to deposit or reverse the ITC or submit objections before formal proceedings are initiated.

Key Issues

1. Whether the impugned letter dated 11.03.2025, issued by the Superintendent (Anti-Evasion) CGST, is a valid pre-adjudication notice under the Central Goods and Services Tax Act, 2017, or requires adherence to specific procedural forms? Petitioner's contention: The petitioner argued that the notice for reversal of alleged ineligible ITC, along with interest and penalty, was issued without conforming to the prescribed procedure under the Act of 2017, specifically regarding the format of such notices, if any, under Section 74(5), which should be in Form GST DRC-01A. Revenue's contention: The respondent-revenue argued that the impugned letter is merely an intimation under Section 74(5) of the Act of 2017, intended to enable the assessee to deposit or reverse the ineligible ITC along with interest and penalty before formal proceedings under Section 73(1) or 74(1) are initiated. They relied on a previous decision of the same court in a similar case involving the petitioner (WP(C) No.227/2024) where a similar notice was held to be an intimation.