Tax Credit Relief: Late GSTR 3B Filers Granted Partial ITC and Temporary Protection Against Coercive Actions

HC ruled on a tax credit dispute involving late GSTR 3B filing. The court granted an interim order allowing partial Input Tax Credit based on proposed Finance Bill amendments. Petitioners were directed to deposit Rs.25 lakhs as security and were provided a three-week restraining order against coercive actions by tax authorities. The interim relief extends until September 2024, subject to compliance with payment conditions.

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Issues:
1. Challenge to an adjudication order under Section 73(9) of the CGST/WBGST Act, 2017.
2. Claim of Input Tax Credit (ITC) based on late filing of GSTR 3B.
3. Proposed amendment in the Finance Bill to allow ITC benefit for certain tax periods.
4. Prima facie case for an interim order based on the Finance Bill provisions.
5. Direction for the petitioners to make a deposit to secure part of the determination amount.
6. Unconditional order restraining coercive steps by respondents for a specified period.
7. Exchange of affidavits and liberty to mention for inclusion.

Analysis:
The judgment of the Calcutta High Court pertains to a writ petition challenging an adjudication order under Section 73(9) of the CGST/WBGST Act, 2017, dated 22nd January, 2024. The petitioners contested the denial of Input Tax Credit (ITC) amounting to Rs.3,96,04,918 under IGST, Rs.1612 under CGST, and Rs.1612 under SGST due to the late filing of GSTR 3B beyond the prescribed deadline of 20th October, 2019. The petitioners relied on a proposed amendment in the Finance Bill to allow ITC benefit for returns filed up to 30th November, 2021, pertaining to specific financial years. The Court considered the prima facie case made by the petitioners and granted an interim order based on the potential impact of the Finance Bill on the determination made under Section 73 for the Financial Year 2018-19.

Furthermore, the Court directed the petitioners to deposit Rs.25 lakhs with the Registrar General within three weeks to secure a part of the determined amount. This deposit was to be invested in an interest-bearing fixed deposit account until further court orders. Additionally, the Court issued an unconditional order restraining the respondents from taking coercive steps against the petitioners for three weeks from the date of the judgment. The interim order was to remain in effect until the end of September 2024 or until further orders, provided the petitioners complied with the payment directive. The judgment also allowed the parties to exchange affidavits and granted liberty to mention for inclusion, ensuring procedural fairness and further opportunities for submissions in the case.

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