2019 (10) TMI 478 - HC - GST

Court rectifies officer's error in GST rule application, emphasizes compliance.

The court addressed the petitioner's concerns regarding the proper officer's failure to follow the prescribed procedure under Rule 92 of the Central Goods ... Amendment of pleading - Procedure under rule 92(3) of the Central Goods and Services Tax Rules, 2017 - Re-credit to electronic credit ledger under rule 93 of the Central Goods and Services Tax Rules, 2017 - Applicability of rule 89(3) of the Central Goods and Services Tax Rules, 2017 - Service of notice - Permission for direct serviceAmendment of pleading - Draft amendment tendered on behalf of the petitioner was allowed and directed to be carried out forthwith. - HELD THAT: - The Court received a draft amendment from the petitioner and, after consideration, permitted the amendment. The order directs that the amendment shall be carried out immediately, thereby granting leave to amend the petition as proposed by the petitioner. [Paras 1]Amendment allowed in terms of the draft and to be carried out forthwith.Procedure under rule 92(3) of the Central Goods and Services Tax Rules, 2017 - Re-credit to electronic credit ledger under rule 93 of the Central Goods and Services Tax Rules, 2017 - Applicability of rule 89(3) of the Central Goods and Services Tax Rules, 2017 - Service of notice - The question whether the proper officer failed to follow the procedure in rule 92(3) and proceeded directly to re-credit under rule 93, and whether rule 89(3) applies, is taken on notice and not finally adjudicated; notice issued returnable on 16.10.2019 for adjudication of these contentions. - HELD THAT: - Counsel for the petitioner pointed out that the proper officer did not follow the procedure prescribed by sub-rule (3) of rule 92 and instead proceeded under rule 93 to re-credit the amount to the electronic credit ledger. It was further submitted that sub-rule (3) of rule 89 applies only to refund applications for input tax credit and is not applicable to the present case, so the question of re-crediting would not arise. The Court did not decide these contentions on the merits but issued notice to the respondent to answer the challenge and fixed the matter for further hearing on the specified date. [Paras 2, 3]Notice issued on the procedural contentions regarding rules 92(3), 93 and 89(3); matter listed for further consideration on 16.10.2019.Permission for direct service - Service of notice - Court permitted direct service of the notice on the respondent. - HELD THAT: - Alongside issuing notice, the Court expressly allowed direct service in the interests of expedition and to ensure the respondent receives the notice without delay. This procedural permission was granted as part of the interlocutory directions. [Paras 4]Direct service permitted.Final Conclusion: The petition was permitted to be amended forthwith; the procedural challenge to the officer's compliance with rules 92(3), 93 and the applicability of rule 89(3) was taken on notice with the matter posted for further hearing on 16.10.2019, and direct service was permitted. Issues:1. Proper officer's failure to follow the procedure as per Rule 92 of the Central Goods and Service Tax Rules, 2017.2. Application of Rule 89 of the said rules in the present case for refund of input tax credit.3. Recrediting the amount to the electronic credit ledger under Rule 93.Issue 1: Proper officer's failure to follow the procedure as per Rule 92:The petitioner's advocate highlighted the provisions of Rule 92 of the Central Goods and Service Tax Rules, 2017, specifically sub-rule (3), emphasizing the procedure the proper officer is required to follow. It was argued that the proper officer did not adhere to the prescribed procedure under sub-rule (3) of Rule 92. Instead, the officer directly applied Rule 93 and re-credited the amount to the electronic credit ledger. The court was made aware of this deviation, indicating a failure on the part of the proper officer to comply with the mandated procedure.Issue 2: Application of Rule 89 for refund of input tax credit:The petitioner's counsel referred to sub-rule (3) of Rule 89 of the Central Goods and Service Tax Rules, 2017, to assert that this provision is applicable only when the application pertains to the refund of input tax credit. However, in the present case, it was argued that the application did not relate to such a refund. Consequently, the contention was raised that the recrediting of the amount to the electronic credit ledger, as done by the proper officer under Rule 93, was not justified based on the nature of the application.Issue 3: Recrediting the amount under Rule 93:In light of the submissions made by the petitioner's advocate regarding the procedural lapses and misapplication of rules by the proper officer, the court took cognizance of the matter and issued notice returnable on a specified date. Additionally, direct service was permitted in this case, indicating the seriousness with which the court viewed the concerns raised by the petitioner regarding the recrediting of the amount to the electronic credit ledger under Rule 93. This step signified the court's willingness to delve deeper into the procedural irregularities pointed out during the proceedings.