GST Input Tax Credit Claim Requires Fair Review and Timely Assessment Under Section 16(4)

HC resolved the dispute by directing respondent to review input tax credit (ITC) claim based on CBIC circular. The court found the petition premature but instructed respondent to consider petitioner's objections within three weeks, ensuring fair assessment of ITC claim under Section 16(4) of CGST Act. The circular's interpretation was deemed relevant in determining ITC availment timing.

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Issues:
Challenge to Show Cause Notice for input tax credit availed, interpretation of Section 16 (4) of CGST Act, reliance on CBIC circular, premature petition, directions for further proceedings.

Analysis:

The petitioner sought relief through a writ to quash the Show Cause Notice demanding input tax credit availed, arguing that the claim was not belated as clarified by a subsequent CBIC circular. The petitioner highlighted that the circular clarified the timing of ITC availment in cases of RCM supplies from unregistered suppliers, emphasizing that the financial year of invoice issuance determines the time limit for ITC claim, not the time of supply. The petitioner contended that the circular supported their claim and should invalidate the Show Cause Notice.

The learned AGA acknowledged the impact of the CBIC circular on the ITC claim timing but deemed the petition premature. It was suggested that the petitioner should respond to the Show Cause Notice, allowing respondent No. 2 to consider the objections and proceed lawfully. The Court noted the relevance of the circular in supporting the petitioner's ITC claim and the binding nature of CBIC circulars as per legal precedent.

Considering the timing of the CBIC circular issuance during the petition pendency, the Court deemed it just to direct respondent No. 2 to review the petitioner's objections in light of the circular. The Court instructed respondent No. 2 to make decisions in accordance with the law and the circular, ensuring the petitioner's rights to file objections within three weeks. The Court disposed of the petition with directions for further proceedings based on the circular and the petitioner's objections, maintaining fairness and adherence to legal principles.

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