Government Demand for Excessive Input Tax Credit Claims During TNVAT to TNGST Transition Upheld as Petitioner Must Exhaust Appeals

The HC dismissed a writ petition challenging a GST order that demanded Rs. 33,25,707 for excessive input tax credit claims during transition from TNVAT to TNGST regime. The court held that statutory appeal remedies must be exhausted before seeking constitutional relief under Article 226, as no exceptional circumstances (violation of natural justice, statutory provisions, or jurisdictional issues) existed. The petitioner was directed to approach the appellate authority to challenge the merits of the tax demand.

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Issues:
Challenge to order in Form GST DRC-07 dated 07.12.2021 for alleged excessive claim of unavailed input tax credit.

Analysis:
The petitioner, a dealer under the TNVAT Act regime, transitioned to the TNGST Act after the GST regime's implementation. The Revenue alleged that the petitioner had excessively claimed unavailed input tax credit for the period 2017-18, leading to a discrepancy of Rs. 22,20,247. Despite a notice issued on 16.10.2019 and an opportunity for a personal hearing, the petitioner did not respond. Consequently, the impugned order was issued on 07.12.2021, directing the petitioner to pay Rs. 33,25,707.

The petitioner argued that no personal hearing opportunity was provided despite submitting relevant documents. The respondent contended that the notice was issued for incorrect input tax credit availment, which was not in the petitioner's electronic credit ledger. The Revenue defended the order, stating that principles of natural justice were not violated, and the petitioner could appeal the decision instead of filing a writ petition.

The court emphasized that appeal remedies under tax statutes must be exhausted before seeking relief under Article 226 of the Constitution. Since none of the exceptional circumstances (violation of natural justice, statutory provisions, or lack of jurisdiction) existed in this case, the petitioner's writ petition was dismissed. The court ruled that the petitioner could challenge the impugned order before the appellate authority on its merits.

In conclusion, the writ petition was dismissed without costs, allowing the petitioner to pursue the matter before the appellate authority. The court highlighted the importance of exhausting appeal remedies before resorting to constitutional remedies, emphasizing adherence to statutory procedures in tax matters.

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