2022 (7) TMI 341 - HC - GST

Input Tax Credit Cannot Be Denied Merely for One-Day Delay in Recording Invoices Under GST Transition Rules

Akshay Steel Works Pvt. Ltd. Versus Union of India, Commissioner of Central Goods and Services Tax and Central Excise, Jamshedpur, Superintendent, Central Goods and Services Tax and Central Excise, Adityapur-II Range, Adityapur Circle, Jamshedpur

Akshay Steel Works Pvt. Ltd. Versus Union of India, Commissioner of Central Goods and Services Tax and Central Excise, Jamshedpur, Superintendent, Central ... Issues: Disallowance of Input Tax Credit under GST Act for delayed recording of invoices in books of account.The judgment by the High Court of Jharkhand involved a dispute regarding the disallowance of Input Tax Credit (ITC) under the GST Act due to the delayed recording of invoices in the petitioner's books of account. The petitioner, engaged in manufacturing steel products and registered under the GST Act, filed Form GST TRAN-1 to claim ITC for services provided, including man power supply for activities like material handling. The case focused on three specific invoices issued by service providers for man power supply. The petitioner paid the service tax under the reverse charge mechanism for these invoices on 12th August 2017. However, the Superintendent disallowed the credit due to a one-day delay in recording the invoices in the books of account, as per a letter dated 12th February 2020.The Commissioner allowed Transitional Credit of Rs. 1,73,989 but disallowed Rs. 1,74,469 paid on 12th August 2017 under the GST regime due to the delay. The petitioner challenged this decision, arguing that the delay in recording the invoices was a technical defect and did not violate any provisions. The petitioner contended that the Commissioner exceeded jurisdiction by disallowing the credit without proper proceedings. The petitioner highlighted that the Transitional Cenvat Credit was credited in the electronic ledger on 20th September 2017, emphasizing the lack of serious breach on their part.The respondent's counsel argued that the writ petition was premature as no proceeding for wrongful availment of ITC had been initiated against the petitioner. The respondent pointed out that statutory remedies were available under the Act if any proceeding for disallowing or recovering the Transitional Credit was initiated. The High Court analyzed the submissions of both parties and the relevant provisions of the CGST Act. The Court concluded that the Commissioner's observations regarding the disallowance of Transitional Credit were incidental to the main issue of condonation of delay in recording entries in the books of account. The Court noted that no proceeding under the relevant provisions of the Act had been initiated, rendering the observations on disallowance premature. The Court clarified that the petitioner would have remedies if a fresh proceeding was initiated in accordance with the law.In the final decision, the High Court disposed of the writ petition with the above observations, indicating that the disallowance of Transitional Credit was premature and subject to future proceedings if initiated lawfully.