GST input tax credit transfer blocked for not filing ITC-02 u/s18/r.41; writ refused, SCN objections directed.

Judicial review of a GST show cause notice (SCN) challenging denial of ITC for non-filing of Form GST ITC-02 under s.18 CGST Act r.41 CGST Rules was declined. The HC held that whether electronic filing was impossible due to portal non-availability/technical error, whether manual filing was permissible, or whether the taxpayer should have awaited portal availability are disputed factual matters to be raised in objections to the SCN with supporting evidence, and decided by the competent authority under the APGST Act as a complete code; absent a plea of lack of jurisdiction or a patently non est notice, writ interference is impermissible. The writ petition was dismissed, directing the taxpayer to respond to the SCN and seek hearing.

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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 Notice
The 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 Filing
The 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 Petition
The 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.

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