2023 (3) TMI 624 - HC - GST

Tax Authority Must Review Input Tax Credit Claim Fairly, Evaluate Petitioner's Response Before Taking Further Action

Geethanjali Versus Assistant Commissioner of CGST & CE Coimbatore Audit Circle II, Coimbatore

HC ruled the tax notice challenging input tax credit was premature. The court directed the tax authority to evaluate the petitioner's reply on merits, ... Liability to pay towards CGST and SGST in respect of tax invoices - alleged mismatch - According to the respondent though the input tax credit in respect of the invoices has been claimed by the petitioner, the supplier has not paid the tax amounts to the respondent - HELD THAT:- Admittedly, the petitioner has challenged only the notice in this writ petition. No final orders have been passed by the respondent in respect of the amounts claimed by them in the impugned notice against the petitioner. Even before a final order has been passed, the petitioner has chosen to file this writ petition, which in the considered view of this Court is premature. However, the adjudicating authority will have to necessarily consider the reply submitted by the petitioner in respect of the impugned notice dated 12.12.2022 on merits and in accordance with law. As seen from the impugned notice only an intimation has been made by the respondent to the petitioner about the proposal to reverse the input tax credit availed by the petitioner and no final order has been passed. Hence, the question of entertaining this writ petition at this stage will not arise. This writ petition is disposed of by directing the adjudicating authority to give due consideration to the reply dated 06.01.2023 submitted by the petitioner and to take a final decision on merits and in accordance with law and the respondent, if they come to the conclusion that the reply is acceptable to them, they shall drop any further proceedings against the petitioner, but if they decide otherwise, the respondent shall follow the due procedure established under law for taking further action against the petitioner. Issues:Challenge to impugned notice regarding CGST and SGST liability based on alleged mismatch in tax invoices.Analysis:The petitioner challenged an impugned notice issued by the respondent concerning the payment of CGST and SGST based on alleged mismatches in tax invoices. The respondent claimed that despite the petitioner claiming input tax credit for certain invoices, the supplier had not paid the tax amounts to the respondent. The petitioner contended that they had provided seller details to the respondent and had already replied to the notice, raising objections and citing non-compliance with GST council press notes and relevant legal provisions. The petitioner also referred to Supreme Court decisions to support their position.The Court noted that the petitioner had only challenged the notice in the writ petition, and no final orders had been issued by the respondent regarding the claimed amounts. The Court deemed the petition premature as final orders had not been passed, emphasizing that the adjudicating authority must consider the petitioner's reply on its merits and in accordance with the law. The impugned notice only served as an intimation of the proposal to reverse input tax credit without a final decision. The Court directed the adjudicating authority to evaluate the petitioner's reply and make a final decision in accordance with the law. If the reply is acceptable to the respondent, further proceedings against the petitioner should be dropped; otherwise, the respondent must follow due legal procedures for any further action. The Court disposed of the writ petition without costs, instructing the respondent to act based on the outcome of the evaluation of the petitioner's reply.