M/S Shivneel Gas Sales vs. The Assistant Commissioner Of Commercial Taxes (Audit)

Facts

The petitioner, M/s Shivneel Gas Sales, filed a writ petition challenging an Adjudication Order dated 01.12.2023 passed by the Assistant Commissioner of Commercial Taxes (Audit) under Section 73(9) of the CGST/KGST Act, 2017. The petitioner also challenged the consequential GST Form DRC-07, Show Cause Notice under Section 73, and Intimation under Section 73 in Form GST DRC-01, all issued by the first respondent. The core of the dispute pertains to the petitioner's claim for Input Tax Credit (ITC) for the financial year 2017-18, which was denied due to delayed filing of returns. The petitioner filed returns for the period July 2017 to March 2018 between April 2019 and August 2019, whereas the due dates for filing were between August 2017 and April 2019.

Held

The Court allowed the petition, quashing the Adjudication Order dated 01.12.2023. The Court found that the petitioner's grievance was primarily with the Adjudication Order passed under Section 73 of the Act. The Court noted the insertion of Section 16(5) of the Act, effective from 01.07.2017, which allows for ITC entitlement if returns are filed by 30.11.2021 for the period 2017-18 to 2020-21. The Court observed that the petitioner's returns for the period 2017-18 were filed before 30.11.2021. Therefore, the Court held that the petitioner would be entitled to ITC. The proceedings were restored to the first respondent to pass a formal order in light of this observation, considering the retrospective insertion of Section 16(5). The Court directed the first respondent to pass a formal order by 30.10.2026 and communicate it to the petitioner by 30.11.2026. The issues regarding the legality of Section 16(4) and the notifications were not expressly decided but were implicitly addressed by the Court's focus on Section 16(5).

Key Issues

1. Whether the Adjudication Order dated 01.12.2023, passed under Section 73(9) of the Act, is liable to be quashed? 2. Whether Section 16(4) of the CGST Act is illegal and ultra vires the Constitution of India? 3. Whether Notification No. 9/2023-CT dated 31.03.2023 and Notification 06/2023 dated 06.04.2023 are illegal and ultra vires Section 168A of the CGST Act and KGST Act respectively? 4. Whether the petitioner is entitled to Input Tax Credit for the financial year 2017-18? Petitioner's arguments: The petitioner contended that Section 16(4) of the CGST Act is illegal and arbitrary. They also argued that the impugned notifications are ultra vires Section 168A of the Act. Crucially, the petitioner relied on the insertion of Section 16(5) of the Act, which became effective from 01.07.2017, stating that a Registered Taxable Person is entitled to ITC if returns are filed up to 30.11.2021 for the years 2017-18 to 2020-21. Since the returns for 2017-18 were filed before this date, the petitioner should be entitled to ITC. Respondents' arguments: The judgment does not explicitly record arguments from the respondents regarding the illegality of Section 16(4) or the notifications. Their defense likely centered on the adherence to the provisions of Section 73 concerning delayed return filings and the consequent denial of ITC.