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of <h1>Karnataka HC sets aside recovery notice and ITC rejection, orders immediate credit balance release following established precedent</h1> <h3>M/s. Emmar Project Contractors India (P) Limited Versus The Asst. Commissioner Of Commercial Taxes, Mangalore., Goods And Services Tax Council, Central Board Of Indirect Taxes And Customs New Delhi, The State Of Karnataka.</h3> Karnataka HC allowed petition challenging recovery notice and rejection of Input Tax Credit. Court followed precedent from M/s. Sadhana Enviro Engineering ... Challenge to Recovery notice - rejection of Input Tax Credit - HELD THAT:- A perusal of the material on record will indicate that the issue in controversy involved in the present petition is directly and squarely covered by the judgment of this Court in the case of M/S. SADHANA ENVIRO ENGINEERING SERVICES VERSUS THE JOINT COMMISSIONER OF CENTRAL TAX; THE PRINCIPAL COMMISSIONER OF CENTRAL TAX BENGALURU; UNION OF INDIA; STATE OF KARNATAKA REPRESENTED BY ITS SECRETARY, BANGALORE [2024 (9) TMI 1648 - KARNATAKA HIGH COURT] where it was held that 'The respondents are directed to unblock and release the credit balance of the petitioner in their ITC Ledger / Account, if not already released, immediately / forthwith upon receipt of a copy of this order without any delay.' Petition is hereby disposed of in terms of the judgment of this Court in the case of M/s. Sadhana Enviro Engineering Services vs. Joint Commissioner of Central Tax & others - the impugned Order is set aside - petition allowed. Issues:1. Quashing of recovery notice issued under KGST Act2. Quashing of assessment order rejecting input credit claim3. Quashing of notice rejecting input credit benefits4. Direction to allow input tax credit benefits5. Implementation of amended provisions under Section 16(5) of CGST/KGST ActAnalysis:Issue 1: Quashing of recovery notice under KGST ActThe petitioner sought a writ of certiorari to quash the recovery notice issued under the KGST Act for the period of April 2018 to March 2019. The court noted the petitioner's request and directed the respondents to implement the amended provisions under Section 16(5) of the CGST Act within a specified timeframe.Issue 2: Quashing of assessment order rejecting input credit claimThe petitioner also sought to quash the assessment order rejecting the input credit claim of Rs. 35,3900 and imposing penalties. The court acknowledged the insertion of Section 16(5) through 'The Finance (No. 2) Act, 2024,' extending the time limit for availing credit. The court directed the respondents to implement the amended provisions and quashed the impugned blocking of the Input Tax Credit (ITC) ledger.Issue 3: Quashing of notice rejecting input credit benefitsAdditionally, the petitioner requested the quashing of a notice rejecting input credit benefits. The court, in line with the earlier judgment and the amended provisions, directed the respondents to provide a reasonable opportunity to the petitioner and proceed in accordance with the law within a specified timeframe.Issue 4: Direction to allow input tax credit benefitsThe petitioner sought a writ of mandamus to allow claiming input tax credit benefits. The court, considering the insertion of Section 16(5) and the petitioner's entitlement to credit, directed the respondents to unblock and release the credit balance in the petitioner's ITC Ledger without delay.Issue 5: Implementation of amended provisions under Section 16(5) of CGST/KGST ActThe court emphasized the significance of the amended provisions under Section 16(5) of the CGST Act, inserted through 'The Finance (No. 2) Act, 2024,' extending the time limit for availing input tax credit. The court disposed of the petition in accordance with the judgment in a similar case and directed the parties to comply with the amended provisions within a specified timeframe.In conclusion, the court's judgment focused on the implementation of the amended provisions under Section 16(5) of the CGST Act, extending the time limit for availing input tax credit, and directed the respondents to provide a reasonable opportunity to the petitioner and proceed in accordance with the law.
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