2023 (6) TMI 940 - HC - GST

Landmark GST Tax Credit Dispute Resolved: Petitioner Wins, Respondent Ordered to Return Funds and Rectify Claims Under Section 16

AGRAWAL AND BROTHERS Versus UNION OF INDIA, OFFICE OF THE SUPERINTENDENT, CGST AND CENTRAL EXCISE, RANGE-I DIVISION

HC ruled in favor of petitioner regarding GST tax credit dispute. Respondent No.1 was directed to return Rs.13,38,544/- within 2 months and allowed to ... Refund of amount deposited wrongly - GST was deposited with different / wrong registration number (GSTIN) - whether the petitioner is liable to suffer for the fault committed by respondent No.1? - HELD THAT:- There is an admitted mistake on the part of respondent No.1 Railway that the amount of GST was deposited in wrong GST number. It is a settled law that no one cannot be made to suffer for the fault of another. Since this deposit of GST was not reflected in the account of the petitioner, therefore, a show cause notice was issued and the petitioner had to pay the GST to the department with interest again in order to avoid the cancellation of GSTIN, therefore, he is entitled to seek the return of Rs.13,38,544/- from the respondent No.1. The senior DFM / RTM sent a letter to the Commissioner GST and Excise Duty Office, Ralam and requested that if the amount of Rs.9,35,486/- has been received, the same be refunded as it was wrongly deposited. The respondent No.1 is directed to return the amount of Rs.13,38,544/- to the petitioner within 2 months from today. Respondent No.1 shall be at liberty to submit a claim before the GST department as the same has been paid by the petitioner and if such claim is submitted, the competent authority of respondent No.2 shall decide the same in accordance with the law - petition allowed. Issues involved: The issues involved in the judgment are related to the return of an amount by respondent No.1 to the petitioner, the adjustment of tax paid under the CGST Act, 2016, the input tax credit claimed by the petitioner, the demand notice issued by respondent No.2 for input tax credit recovery, and the discrepancy in GST deposit by respondent No.1.Return of Amount by Respondent No.1: The petitioner sought direction for the return of Rs.13,38,544/- from respondent No.2, as the amount was paid under protest to avoid GSTIN cancellation. The petitioner argued that they should not suffer for respondent No.1's fault of depositing GST in the wrong account. The Court held that the petitioner is entitled to seek the return of the amount from respondent No.1.Adjustment of Tax Paid under CGST Act, 2016: The petitioner claimed an input tax credit of Rs.9,35,486/- against the purchase made from respondent No.1. Section 16 of the CGST Act allows for the adjustment of tax paid at the time of purchase, with only the balance liability of tax to be paid to the Government.Demand Notice for Input Tax Credit Recovery: Respondent No.2 issued a demand notice to the petitioner for input tax credit recovery along with interest under the GST Act, 2017. The petitioner was served with a show-cause notice for wrongly availing input tax credit amounting to Rs.26,70,414/-. The Assistant Commissioner confirmed a demand of Rs.9,34,096/- with interest, while dropping the demand for recovery of Rs.17,38,572/- and imposing a penalty of Rs.10,000/-.Discrepancy in GST Deposit by Respondent No.1: Respondent No.1 inadvertently deposited the GST in the wrong account instead of the petitioner's correct GST account. This led to a show cause notice being issued to the petitioner, who had to repay the GST with interest to avoid GSTIN cancellation. The Court directed respondent No.1 to return the amount to the petitioner and allowed them to submit a claim before the GST department for the amount paid.Separate Judgment by the Judges: The Writ Petition was allowed by the Court, directing respondent No.1 to return the amount to the petitioner within 2 months. Respondent No.1 was given the liberty to submit a claim before the GST department, and the Court imposed a cost of Rs.10,000/- in favor of the petitioner payable by respondent No.1.