Court upholds demand letter for Input Tax Credit, stresses procedural compliance and legality

M/s. Narula Menthol Industries Versus Union Of India, The Superintendent Central Goods And Services Tax Range III Rudrapur, The Assistant Commissioner Central Goods And Services Tax Rampur UP

M/s. Narula Menthol Industries Versus Union Of India, The Superintendent Central Goods And Services Tax Range III Rudrapur, The Assistant Commissioner ... Issues:
Challenge to demand letter for Input Tax Credit under Section 73 of the Act.

Analysis:
The petitioner challenged a demand letter for Input Tax Credit issued by respondent No. 2 on 28.06.2021. The petitioner contended that the proceedings initiated based on the communication were in violation of Section 73 of the Act and a Circular issued by the Government regarding recovery modalities. The petitioner argued that any references required for recovery should include the DIN number of the body against whom recovery is proposed. The respondent's counsel clarified that the demand letters were not indicative of immediate recovery action but served as an intimation of demand. Consequently, the court closed the writ petition with liberty to the respondents to proceed with any recovery action strictly in accordance with the law, specifically under Sections 73 and 74 read with the Rules.

In this judgment, the court primarily addressed the challenge raised by the petitioner against a demand letter for Input Tax Credit issued under Section 73 of the Act. The petitioner contended that the demand letter violated the prescribed procedures outlined in a Circular by the Government. The court considered the arguments presented by both parties, noting the respondent's clarification that the demand letters were not an immediate action for recovery but served as mere intimations of demand. Consequently, the court closed the writ petition, emphasizing that any future recovery actions must strictly adhere to the legal procedures outlined under Sections 73 and 74 of the Act, along with the relevant Rules.

The judgment underscores the importance of procedural compliance in matters related to recovery of Input Tax Credit. By addressing the petitioner's contentions regarding the demand letter and the alleged violation of Section 73 of the Act, the court ensured that any future actions for recovery would be conducted in accordance with the prescribed legal framework. The court's decision to close the writ petition while granting liberty to the respondents to proceed with recovery actions in compliance with the law highlights the significance of procedural adherence and legal safeguards in such cases. This judgment serves as a reminder of the necessity for strict adherence to statutory provisions and procedural requirements in matters concerning tax credit recovery to uphold the principles of fairness and legality in such proceedings.