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One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=760071 https://www.taxtmi.com/caselaws?id=760071 Reversal of Input Tax Credit (ITC) - necessary GST IT 02 form was not filed by its transferor electronically but only manually - breach of provisions of Section 18 (3) of the CGST Act read with Rule 41 of the CGST Rules - Jurisdiction and validity of the show cause notice regarding the non-electronic filing of Form GST ITC-02 - HELD THAT:- Section 18 (3) of the CGST Act provides that where there is a change in the constitution of a registered person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit which remains unutilised in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased or transferred business in such manner as may be prescribed. The impugned show cause notice, after referring to Section 18 (3) of the CGST Act and Rule 41 (1) of the CGST Rules, alleges that the Petitioner has contravened the said two provisions since it has availed and utilised credit of Rs. 18,30,58,995/- (including Rs. 74,06,395/- as IGST Rs. 15,74,90,681/- as CGST and Rs. 1,81,61,919/- as SGST) for payment of tax liability - The allegation in the impugned show cause notice might have had some substance if it had been the Respondents case that its common portal was fully functional and TDN or the Petitioners could file Form GST ITC-02 electronically on the common portal. However, it was conceded that the GST portal was nascent during the relevant time, and GST ITC-02 was not available for filing electronically. Thus, neither the Petitioner nor TDN could be faulted for not filing Form GST ITC-02 electronically on the department s common portal. The record establishes, and in any event, it was not disputed, that TDN or the Petitioner couldn t file Form GST ITC-02 on the department s common portal during the relevant period because of the functionality issues relating to such a common portal. The Division Bench of the Rajasthan High Court in Pacific Industries Ltd Vs. Union of India [ 2022 (3) TMI 1304 - RAJASTHAN HIGH COURT ] noted that though the learned counsel representing the Respondents GST Department, vehemently and fervently opposed the Petitioner s contention, he was not in a position to dispute the fact that Form GST ITC-02A was not available on the GSTN Portal within the stipulated period of 30 days from the date of registration of the Petitioner s new business vertical and hence, the Petitioner was genuinely and bona fide prevented from uploading the same. No dispute was raised about the Petitioner manually submitting the form to the Deputy Commissioner within 30 days. In Savita Oil Technologies Ltd and Savita Polymers Ltd. Vs. The Union of India and Ors. [ 2023 (7) TMI 877 - BOMBAY HIGH COURT ] the Coordinate Bench of this Court of which one of us (Jitendra Jain, J) was a member, the Petitioner was prevented from filing an Appeal against intimations issued in Form DRC-05 because the electronic portal had not made a provision for filing an appeal against an intimation issued in Form DRC-05. The Coordinate Bench noted that an appeal statutorily lay against such intimations issued in Form DRC-05. Therefore, merely because the electronic portal does not make a provision for filing of an appeal against an intimation issued in Form DRC-05, the Petitioners cannot be faulted, and for such technical reason, it cannot be countenanced that a statutory right of appeal available to the Petitioners is rendered otiose. Accordingly, this Court directed that until an appropriate provision is made for acceptance of such appeal electronically, filing of such appeal should be permitted manually. Again, even this decision is an authority for the proposition that the technicalities, mainly when not the party but the department creates them, should not be put forth by the department to defeat the statutory rights and entitlement of the parties. Based on the facts on record and the decided cases referred to above in the case of this very Petitioner, the contention that the impugned show cause notice ought not to have been issued to the Petitioner, is accepted. The Respondents were duty-bound to take cognisance of the decisions of the Allahabad, Gujarat, and Delhi High Courts in dealing with almost identical issues concerning this Petitioner. Tthe impugned show cause notice dated 17 August 2023 is set aside - the Respondents is directed to consider, according to law, the manually filed forms by the TDN as expeditiously as possible. Petition allowed. Case-Laws GST Tue, 08 Oct 2024 00:00:00 +0530