2023 (11) TMI 1057 - HC - GST

Writ petition dismissed challenging show cause notice for input tax credit claims without filing GST-ITC 02 under Section 18

Tikona Infinet Private Limited Versus The State of Andhra Pradesh, Represented by its Principal Secretary

The AP HC dismissed a writ petition challenging a show cause notice (SCN) regarding input tax credit (ITC) claims. The petitioner claimed ITC but failed ... Validity of SCN - petitioner did not avail the opportunity of hearing - petitioner claimed ITC, but did not file GST-ITC 02 electronically as per Section 18 of CGST Act and Rule 41 of the CGST Rules 2017 - HELD THAT:- The question, if electronically filing in GST-ITC 02 could not be because of some technical error, non-availability on GST portal of such Form at the relevant point of time, is a question, which can be duly considered and decided if such plea is taken in the objections pursuant to the show cause notice, by the competent authority. Even if it could not be filed electronically for the reason as mentioned in the letter of the petitioner and also of TDN and manual filing could have been done or the petitioner could have waited for some period for availability of GST-ITC 02 Form on the portal, is also a question, which can be considered and decided by the competent authority. By the show cause notice, the petitioner has been afforded opportunity to file objections and also to file evidence - there are no reason at this stage of the issuance of show cause notice, particularly, when there is no challenge to the jurisdiction of the authority issuing the show cause notice, as also in the absence of any argument challenging the notice on such grounds, on which the judicial review may be open against the show cause notice, to entertain the writ petition. In SPECIAL DIRECTOR VERSUS MOHD. GHULAM GHOUSE [2004 (1) TMI 378 - SUPREME COURT] the Hon’ble Apex Court deprecated the practice of High Courts entertaining writ petitions questioning the legality of show cause notices stalling enquiries as proposed and retarding investigative process. The Hon’ble Apex Court held that unless the High Court is satisfied that the show cause notice was totally non est in the eye of the law for absolute want of jurisdiction of the authority to even investigate into facts, the writ petitions should not be entertained for the mere asking and as a matter of routine, and the writ petitioner should invariably be directed to respond to the show cause notice and take all stands highlighted in the writ petition. In the present case, APGST Act is also a complete code and consequently, the petitioner should respond to the show cause notice raising all such objections, as may be raised before the authority issuing the show cause notice and in case any adverse order is passed and the petitioner feels aggrieved, the petitioner may then have recourse to the appropriate proceedings. In M/S TIKONA INFINET PRIVATE LIMITED VERSUS STATE OF U.P. AND ANOTHER [2023 (8) TMI 46 - ALLAHABAD HIGH COURT] there was admitted position with respect to the non-availability of the Form GST ITC 02 in GST portal for the entire period of 30 days from the registration of the separate business of the entity therein and even on the date of filing of the writ petition. In the present case, such a position is not admitted, which the petitioner would be required to state and establish before the authority. In the present case, the petitioner has not been deprived from availing the input tax credit as of now, but the show cause notice has been issued granting opportunity. So, at this stage, it cannot be said that as a consequence of not submitting Form GST ITC-02 electronically, the petitioner has been deprived of the claim of input tax credit. The petitioner has the opportunity and on such opportunity on verification of such fact, the authority has yet to consider the petitioner’s claim of input tax credit. Thus, the petitioner should approach the authority which has issued the show cause notice and file the objections with evidence, and if so desire, to avail the opportunity of personal hearing with due intimation to the authority concerned - petition dismissed. Issues Involved:1. Legality of the show cause notice issued to the petitioner.2. Denial of Input Tax Credit (ITC) based on manual filing instead of electronic filing of Form GST-ITC 02.3. Maintainability of the writ petition challenging the show cause notice.Summary:Issue 1: Legality of the Show Cause NoticeThe petitioner, Tikona Infinet Private Limited (TIPL), sought a Writ of Mandamus under Article 226 of the Constitution to declare the show cause notice dated 29.09.2023 as illegal, arbitrary, and in contravention of the CGST/APGST Act and Rules. The notice was issued by the Deputy Assistant Commissioner, State Taxes, proposing to levy Rs. 31,81,529/- towards excess ITC claim and Rs. 38,46,389/- towards discrepancies identified. The petitioner was also informed of liability to pay interest under Section 50 of the GST Act 2017. The court held that the petitioner should respond to the show cause notice, raising all objections and providing evidence before the authority. The court emphasized that the authority is expected to decide reasonably and fairly based on the evidence and objections presented.Issue 2: Denial of ITC Based on Manual FilingThe petitioner argued that the ITC claim could not be denied due to manual filing of Form GST-ITC 02, as the electronic functionality was absent. The petitioner had entered into a Business Transfer Agreement with Tikona Digital Networks (TDN) and attempted to transfer ITC manually due to the non-availability of the electronic form on the GSTN portal. The court noted that the petitioner should present this issue before the authority, which would consider the manual filing and the reasons for it. The court referenced similar cases where manual filings were accepted due to technical issues with the GST portal.Issue 3: Maintainability of the Writ PetitionThe respondents argued that the writ petition was premature and not maintainable as the petitioner had the opportunity to present objections and evidence before the authority. The court agreed, citing the judgment in Assistant Commissioner of State Tax v. M/s. Commercial Steel Limited, which held that a writ petition should not be entertained against a show cause notice unless exceptional circumstances are present. The court found no such exceptional circumstances in this case and emphasized that the petitioner should first exhaust the statutory remedies available.Conclusion:The court dismissed the writ petition, directing the petitioner to file objections and evidence before the authority within one week. The authority is to consider and decide the matter within four weeks, ensuring fair and reasonable consideration of the objections and evidence presented. Pending miscellaneous petitions were also closed.