GST Input Tax Credit Dispute: Partial Relief Granted with 10% Tax Deposit and Interim Stay of Demand Order

HC granted partial relief in GST ITC dispute, staying demand order against petitioner subject to 10% tax deposit within seven days. Court scheduled full hearing in July 2024, allowing writ petition to proceed while requiring petitioner to demonstrate partial compliance with disputed tax assessment. Interim order provides temporary relief pending final determination of tax liability.

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Issues:
Challenge to order under Section 73 (9) of the West Bengal/Central Goods and Services Tax Act, 2017 regarding Input Tax Credit (ITC) availed by petitioner, compliance of M/s. Crystolyte Facility Management Pvt. Ltd., interpretation of Ministry of Finance press release, legality of recovery process, request for stay of order, alternative remedy through appeal.

Analysis:
The writ petition challenges an order under Section 73 (9) of the GST Act, raising a demand on the petitioner for availing Input Tax Credit (ITC) in violation of Section 16 (2) (a) of the Act due to M/s. Crystolyte Facility Management Pvt. Ltd., with whom the petitioner had an agreement, closing down its business. The petitioners submitted a supplementary affidavit showing compliance by M/s. Crystolyte Facility Management Pvt. Ltd. until 2018-19, indicating no recovery action against them. The petitioners argue that recovery from them is contrary to law, citing a Division Bench case precedent. The Ministry of Finance's press release is interpreted to support that recovery from buyers is an option only in exceptional situations, which is contested by the respondents.

The petitioner seeks to set aside the order as baseless and requests a stay. The respondents argue for the petitioners to exhaust the appeal remedy before pursuing the writ petition. The Court, after hearing both sides, decides to hear the writ petition, granting a stay on the demand subject to the petitioners depositing 10% of the disputed tax amount with GST authorities within seven days. The interim order is to be in effect until the end of July 2024 or until further notice, with the matter scheduled for consideration in July 2024.

In summary, the judgment addresses the legality of the demand raised on the petitioner for ITC availed, considering compliance by the supplier, interpretation of the Ministry of Finance's guidelines, and the appropriateness of recovery actions. The Court allows the writ petition to proceed, granting a stay on the demand subject to a deposit by the petitioner, emphasizing the need for compliance with the payment condition for the stay to remain effective.

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