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

Held

The Court held that the notice dated 26.02.2024, issued by the Superintendent (Anti-Evasion), CGST, Agartala, is in the nature of an intimation under Section 74(5) of the CGST Act, 2017, read with Rule 142(1A) and 142(2A), in Form GST DRC-01A. The Court found that this intimation is Part A of the process, informing the assessee of the tax, interest, and penalty chargeable. The Court reasoned that the petitioner has not yet received a notice initiating proceedings under Section 74(1) for wrongful availment of ITC. Therefore, the petitioner is required to either make the necessary deposit or reverse the ineligible ITC along with interest and penalty, or file their objections/submissions in Part B of Form GST DRC-01A. The adjudicating officer will then examine these objections before initiating proceedings under Section 74(1). The Court also suggested that if necessary, the adjudicating officer may issue intimation to the selling dealer to resolve the dispute regarding tax deposit.

Facts

The petitioner, M/s Sheuli Rebber Estate, a registered taxpayer under the CGST Act, 2017, received a notice dated 26.02.2024 from the Superintendent (Anti-Evasion), CGST, Agartala. The notice, issued under Section 74 of the CGST Act, 2017, demanded payment or reversal of ineligible Input Tax Credit (ITC) availed for the period 01.09.2023 to 13.09.2023, along with applicable interest and penalty. This action was prompted by a mismatch between the petitioner's GSTR-2A and GSTR-3B returns. The petitioner contended that they are a bonafide purchasing dealer who paid taxes on invoices from respondent No.4, a selling dealer whose GST registration was subsequently cancelled. The petitioner argued that the notice was issued without scrutinizing the selling dealer's responsibility for non-deposit of tax.

Key Issues

1. Whether the writ petition is maintainable to examine the propriety of issuing a notice for reversal of ITC, along with interest and penalty, when the petitioner claims the ITC was admissible. The petitioner argued that the writ petition is maintainable, citing judgments from the Jharkhand, Madras, and Calcutta High Courts (Tarapore and Company v. State of Jharkhand, D.Y. Beathel Enterprises v. State Tax Officer, and LGW Industries Limited v. Union of India). The petitioner contended that they are a bonafide purchaser and the issue of tax deposit by the selling dealer should be investigated before demanding reversal from them. The respondent-CGST argued that the notice is an intimation under Section 74(5) of the CGST Act, 2017, in the nature of Form GST DRC-01A, allowing the petitioner to either deposit the amount, reverse the ITC, or submit objections under Rule 142(2A) before formal proceedings under Section 74(1) are initiated.