2024 (12) TMI 924 - HC - GST

VAT Input Tax Credit disallowance challenge disposed with direction to appeal after depositing 20% tax under Section 112(8)

The Chhattisgarh HC disposed of a writ petition challenging VAT Act orders regarding disallowance of Input Tax Credit. Following the Patna HC precedent in ... Maintainability of petition - availability of alternative remedy - Chellenge to order and consequent summary of demand - disallowance of ITC claimed under VAT Act - HELD THAT:- The Hon’ble Patna High Court in M/s Cohesive Infrastructure Developers Pvt. Ltd. [2023 (11) TMI 247 - PATNA HIGH COURT] disposed of the identical cases holding that 'Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T Act.' In the light of the submissions made by the learned counsel for the respective parties as well as looking to the judgment passed by the Hon’ble Patna High Court in the matter of M/s Cohesive Infrastructure the present writ petition is disposed of with a direction that the petitioner may file an appeal before the appellate tribunal after depositing 20 per cent of the demanded tax amount as required to be deposited as per the provisions of Section 112 (8) of the Act, 2017 within 30 days from receipt of copy of this order. Petition disposed off. Issues:Challenge to order and summary of demand in GST appeal, challenge to show cause notice and proceedings conducted, validity of tax liability, imposition of interest and penalty, jurisdiction of Appellate Authority, natural justice principle violation, relief sought in writ petition, disallowance of ITC under VAT Act, appeal process, deposit requirement for filing appeal, statutory stay benefit, compliance with judgment directions.Analysis:The writ petition challenges the order and summary of demand in a GST appeal, along with the show cause notice and proceedings conducted, claiming them to be arbitrary and in excess of jurisdiction. The Appellate Authority upheld the tax liability, interest, and penalty, leading to the petitioner seeking various reliefs, including setting aside the orders and notices. The petitioner's appeal process involved disallowance of Input Tax Credit (ITC) under the VAT Act for multiple financial years, with subsequent appeals dismissed by various authorities. The show cause notice imposed a significant tax liability, interest, and penalty, leading to an appeal and deposit of a partial amount. The petitioner argued that the Appellate Authority did not properly exercise its jurisdiction and failed to consider relevant documents and ongoing litigation regarding ITC disallowance.The State argued that a 20% tax deposit is required to file an appeal before the appellate tribunal, as per the provisions of the Act of 2017. The court considered the arguments from both parties and reviewed the record meticulously. Referring to a judgment by the Patna High Court in a similar case, the court directed the petitioner to file an appeal before the appellate tribunal within 30 days, upon depositing 20% of the demanded tax amount. The statutory stay benefit under Section 112 (9) of the Act would remain until the appeal is decided. Failure to comply with the deposit requirement would nullify the court's order, allowing the State to proceed with recovery actions.The court's decision was influenced by the Patna High Court's judgment, emphasizing the deposit requirement for filing an appeal and the statutory stay benefit. The judgment provided a clear direction for the petitioner to follow in pursuing the appeal process and complying with the statutory provisions. The court's disposal of the writ petition was contingent upon the petitioner's adherence to the deposit requirement and timely filing of the appeal before the appellate tribunal. Compliance with the judgment directions was crucial for the petitioner to maintain the statutory stay and pursue the appeal effectively.