2021 (2) TMI 751 - HC - GST

Petitioner must comply with Section 73 to present documents for fair resolution. Amendment allowed.

The court directed the petitioner to participate in the proceedings under Section 73 of the JGST Act before the respondent, emphasizing the importance of ... Ineligible ITC availed - Blocking of its electronic credit ledger due to non-filing of GSTR-3B by its vendor - Rule 86A(1)(a)(i) of the Jharkhand Goods andService Tax Rules, 2017 - the case of the petitioner is that these notices have been issued without proper application of mind - Principles of natural justice - HELD THAT:- Under the revised notice the demand has been reduced since the tax dues have been partially deposited through the interim resolution professional. Petitioner has shown evidence of invoice and payment details, but instead of proceeding against the vendor (respondent no.4),the impugned notices have been issued for reversal of ITC against the petitioner. However, learned counsel for the petitioner does not dispute that a proceeding under Section 73(1) of the JGST Act read with Rule 142(1A) of the JGST Rules 2017 has been initiated against the petitioner and is presently pending before the respondent no.3. This Court is also of the view that the petitioner should subject himself to the proceedings initiated under Section 73 of the JGST Act before the respondent no.3 Deputy Commissioner of State Taxes, Adityapur Circle, Jamshedpur and produce all relevant documents, invoices, records, etc. for proper adjudication thereupon. It would not be proper for the Writ Court to enter into the merits of the controversy at this stage in such circumstances. Petitioner should appear before the respondent no.3 on 8th February 2021. Issues:1. Blocking of electronic credit ledger due to non-filing of GSTR-3B by vendor.2. Issuance of demand notices under Rule 86A(1)(a)(i) and Rule 86A(1)(b).3. Allegation of notices issued without proper application of mind.4. Dispute regarding transaction timeline and applicability of Rule 86A.5. Initiation of proceedings under Section 73 of the JGST Act.6. Court's direction on the petitioner's appearance and submission of relevant documents.Analysis:1. The petitioner approached the court regarding the blocking of its electronic credit ledger due to the non-filing of GSTR-3B by the vendor. Two demand notices were issued under Rule 86A(1)(a)(i) of the Jharkhand Goods and Service Tax Rules, 2017, asking the petitioner to reverse the ITC amount with interest by a specified date.2. The petitioner challenged the demand notices, alleging that they were issued without proper application of mind. The first notice was based on the vendor being labeled a 'non-existent dealer,' while the revised notice was issued because the vendor was a GSTR-3B return defaulter. The petitioner argued that the transactions with the vendor were completed before the amendment introducing Rule 86A came into effect.3. The petitioner contended that despite providing evidence of invoices and payments, the notices targeted the petitioner for ITC reversal instead of the vendor. However, proceedings under Section 73(1) of the JGST Act against the petitioner were already initiated and pending before the respondent.4. The court acknowledged arguments on the merits but directed the petitioner to participate in the proceedings initiated under Section 73 of the JGST Act before the respondent. The court emphasized the importance of producing all relevant documents and records for proper adjudication, advising against pursuing the matter in the writ proceedings.5. Consequently, the court disposed of the writ petition, allowing the petitioner to seek an amendment. The petitioner was instructed to appear before the respondent and present necessary documents by a specified date, with the respondent aiming to conclude the proceedings within a designated timeframe for a fair resolution of the matter.