TaxTMI 
TaxTMI 
2023 (7) TMI 1226
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....dent and not allowing such extension to the others and thereby distinguishing other tax payers on account of COVID-19 pandemic is arbitrary, illegal and violative of Article 14 of Constitution of India. (d) That the action of Respondent No. 1 in passing summary order vide ref No. ZD370322002865K, dated 15.3.2022 in Form GST DRC-07 under the GST Acts, without serving proper show cause notice in Form GST DRC-01 and granting sufficient opportunity to the petitioner U/s 74(5) of the Act and not considering petitioner's submissions and COVID- 19 limitations r/w Amnesty Notifications but confirming the demand of tax, interest and penalty by restricting the credit with erroneous facts in spite of collection of late fee of Rs. 10,000/- for the delay for filing the returns is not only violative of principles of natural justice but also arbitrary, improper, illegal and violative of Article 14, 19(1)(g), 20, 21 and 300-A of Constitution of India and consequently set aside the summary order / proceedings of the 1st respondent as null and void and pass such other order deemed fit in the circumstances of the case. 2. Petitioner's case briefly is thus: (a) Petitioner is a sol....
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....t notice dt: 16.12.2021 was sent by department through private e-mail ID. The said e-mail ID is the official e-mail ID allotted to the 1st respondent. Further, the notice was sent in Form GST DRC-01 as per Rule 142 of GST Rules, 2017 and various contentions raised by the petitioner in his reply have been considered in a just and proper manner and without any bias and they were rejected on cogent reasons. Further, before passing order, in terms of Section 75(4) and (5) of GST Act, 2017 a brief show cause notice was issued and an opportunity of personal hearing was given to the petitioner. Thereby principles of natural justice were followed. As the reply filed by the petitioner was not in accordance with the provisions of GST Act and Rules, 2017 the same was rightly rejected. Therefore, it is false to core to contend that the reply filed by the petitioner was not considered before passing the impugned order. No provisions of Articles 14, 16 and 19(1)(g) of the Constitution of India have been infringed in the instant case. In fact those Articles have no relevancy to the case on hand. (c) It is further contended that in view of plethora of decisions of Apex Court reiterating t....
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....ioner did not exercise this option also. Hence the writ petition is liable to be dismissed. 4. The petitioner filed a lengthy reply denying the counter averments. 5. Heard arguments of Sri Rama Krishna Kumar Potturi, learned counsel for petitioner, learned Advocate General representing the respondents 1 & 2 and the Deputy Solicitor General Sri N.Harinath representing the 3rd respondent. 6. The following points emerge for consideration: (1) Whether by virtue of imposition of time limit for claiming Input Tax Credit (ITC), Section 16(4) of the APGST Act and CGST Act, 2017 violated Article 14, 19(1)(g) and 300A of the Constitution of India and thereby, liable to be struck down? (2) Whether Section 16(2) of the APGST / CGST Act, 2017 would prevail over 16(4) of APGST / CGST Act, 2017 and thereby if the conditions laid down in Section 16(2) of the APGST / CGST Act, 2017 are fulfilled, the time limit prescribed under Section 16(4) of the APGST / CGST Act, 2017 for claiming ITC will pale into insignificance? (3) Whether the acceptance of Form GSTR-3B returns of March 2020 filed on 27.11.2020 by the petitioner with a late fee of Rs. 10,000/- will exonera....
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....nnot be deprived of the right of ITC on the sole ground that claim was made beyond the period prescribed under Section 16(4). (a) Learned counsel would argue that in the backdrop of facts, the imposition of interest and 100% of penalty that too without giving an opportunity of hearing the petitioner is atrocious and liable to be set aside. He placed reliance on (i) Graintoch Industries Ltd. v. Commissioner of C. EX, Aurangabad 1 2014 (310) E.L.T 812 (Trl. - Mumbai ) (ii) Sr. Post Master v. Commissioner of C. EX. & S.T. Bolpur 2016 (42) S.T.R. 542 (Tri. - Kolkata) (iii) Candid Security Services v. Commissioner of C. EX. & S.T., Raipur 2019 (28) G.S.T.L. 281 (Tri. - Del) (iv) Electic Developers Ltd. v. Commissioner of Central Excise, Goa 2019 (24) G.S.T.L. 459 (Tri - Mumbai). 9. Arguments of Advocate General: In oppugnation, the perspicuous argument of learned Advocate General is in the lines that it is misnomer to elevate the refund claim of ITC to the level of an unbridled legal right where in reality, it is no more than a statutory rebate or a mere concession given to a GST taxpayer as has been reverberated in a slew of judgments. He placed reliance on Jayam and co. v.....
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....1) of the APGST Act, 2017 is that the petitioner filed monthly returns belatedly as mentioned below, after due date prescribed under Section 39 of the APGST Act, 2017 for the month of September 2020 and thereby claimed ITC of Rs. 4,78,626/- irregularly in contravention of the provisions under Section 16(4) of the APGST Act / CGST Act read with Section 20 of the IGST Act, 2017. S.No. Year Tax period GSTR 3B RETURN Prescribed date for filing for the month of succeeding year September Amount of ITC irregularly claimed under all acts Due date for filing Date of filing 1. 2019-20 Mar 2020 30.06.2020 27.11.2020 20.10.2020 4,78,626 (a) The petitioner was served with show cause notice, for which he filed written objections and according to the Department, personal hearing was accorded on 02.03.2022. The impugned assessment order dated 14.03.2022 would show, the petitioner had taken about 10 factual and legal objections which were discussed and rejected by 1st respondent in the impugned order by confirming the demand of Rs. 11,24,994/- comprising (i) tax of Rs. 4,78,626/- (ii) interest of RS. 1,67,742/- and (iii) penalty of Rs. 4,78,626/- (....
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....r the assessee gets the ITC. Under Section (2) (63) of APGST Act, 2017 an Input Tax Credit means the credit of Input Tax. 12. Be that as it may, the controversy revolves around the interpretation of Section 16 (2) and (4) of APGST Act/CGST Act. Before examining the effect of Section 16(2) and (4) of APGST/CGST Act it is relevant to ruminate the cardinal principle of interpretation. In Reserve Bank of India v. Peerless General Finance and Investment Co Ltd AIR 1987 SC 1023 = MANU/SC/0073/1987, the Apex Court observed thus: "Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute-maker, provided by such context, its scheme, the sec....
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.... said supply; and (d) he has furnished the return under section 39: Provided that where the goods against an invoice are received in lots or installments, the registered person shall be entitled to take credit upon receipt of the last lot or installment: Provisional Reversal of ITC Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed: Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon. 3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under....
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.... any person on the direction of and on account of such registered person;] [Substituted by the CGST (Amdt.) Act, 2018 (31 of 2018), dt. 30-08-2018, w.e.f. 1-2-2019 vide Noti. No. 02/2019-Central Tax, dt. 29-1-2019.] [(ba) the details of input tax credit in respect of the said supply communicated to such registered person under section 38 has not been restricted;] [Inserted by Finance Act, 2022] (c) subject to the provisions of [section 41] [Substituted for "Section 41, CGST (Amdt.) Act, 2018 (31 of 2018, dt.30-8-2018. Effective date yet to be notified] [***] [Words "or section 43A" omitted by Finance Act, 2022], the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 39: PROVIDED that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment: PROVIDED FURTHER that where a recipient fails to pay to the supplier of goods or services or both, other than th....
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.... which was charged on any supply of goods or services or both which were used or intended to be used in the course of furtherance of his business. Precisely while Section 16 sub-section (2) prescribes the eligibility criteria which is sine qua non for claiming ITC, subsection (3) and (4) impose conditions or limitation for claiming ITC. In other words, even if an assessee passes basic eligibility criteria imposed under section 16(2), still he will not be entitled to claim ITC if his case falls within the limitations prescribed under sub-sections (3) and (4). (a) Pithily stating the eligibility criteria prescribed under sub-section (2) is thus: (i) The assessee shall be in possession of tax invoice or debit note or such other taxpaying documents as issued by a registered supplier. (ii) The assessee has physically received the goods or services or both. Provided, where the goods against invoices are received in lots or instalments, assessee shall be entitled to take ITC upon receipt of a last lot or instalment; (iii) The tax charged in respect of such supply has been actually paid to the Government (iv) The assessee has furnished the retur....
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....effect over the provision of the Act or the contract mentioned in the non-obstante clause. It is equivalent to saying that in spite of the provision of the Act or any other Act mentioned in the non-obstante clause or any contract or document mentioned the enactment following it will have its full operation or that the provisions embraced in the non-obstante clause would not be an impediment for an operation of the enactment" (iii) In R.S Raghunath v. State of Karnataka AIR 1992 SC 81 = MANU/SC/0012/1992 the Apex Court observed: "22. On a conspectus of the above authorities it emerges that the non obstante clause is appended to a provision with a view to give the enacting part of the provision an overriding effect in case of a conflict." (iv) In Maru Ram v. Union of India AIR 1980 SC 2147 =MANU/SC/0159/1980 the Apex Court referred the ratio in Godse's case MANU/SC/0156/1961 and observed thus: "20. We cannot agree with counsel that the non obstante provision impliedly sustains. It is elementary that a non obstante tail should not wag a statutory dog (see for similar idea, "The Interpretation and Application of Statute's by Reed Dicker-son, p, 10). ....
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....he legislature had intended to give the overriding effect to the enacting part of the provision succeeding to the non obstante clause over rest of the provision. Now the pertinent question is whether Section 16 Sub Section (2) overrides the rest of the Section particularly Sub Section (4). 19. When analyzed, Section 16(2) shall not appear to be a provision which allows input tax credit, rather ITC enabling provision is Section 16(1). On the other hand, Section 16(2) restricts the credit which is otherwise allowed to only such cases where conditions prescribed in it are satisfied. Therefore, Section 16(2) in terms only overrides the provision which enables the ITC i.e., Section 16(1). This is evident from the manner in which Section 16(2) is couched. The non obstante clause in Section 16(2) is followed by a negative sentence "no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless". This negative sentence pellucidly tells that unless the conditions mentioned in Section 16(2) are satisfied, no credit will be eligible. This stipulation manifests that Section 16(2) is not an enabling provision but a re....
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....ed supra 16(4) only prescribes time restriction to avail credit. For this reason, the argument that 16(2) overrides 16(4) is not correct. Thus in substance Section 16(1) is an enabling clause for ITC; 16(2) subjects such entitlement to certain conditions; Section 16(3) and (4) further restrict the entitlement given U/s 16(1). That being the scheme of the provision, it is out of context to contend that one of the restricting provisions overrides other two restrictions. The issue can be looked into otherwise also. If really the legislature has no intention to impose time limitation for availing ITC, there was no necessity to insert a specific provision U/s 16(4) and to further intend to override it through Section 16(2) which is a futile exercise. 20. Then the next contention of the petitioner is that since Form GSTR-3B return of March, 2020 filed on 27.11.2020 by the petitioner was accepted with a late fee of Rs. 10,000/-, such acceptance will exonerate the delay in filing return U/s 16(4) and therefore along with his return, the ITC claim shall also be considered. In our considered view this argument holds no much force for the reason that the conditions stipulated in Section....
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....n 10 must be fulfilled. In that hue, we find that Section 10 makes original tax invoice relevant for the purpose of claiming tax. Therefore, under the scheme of the VAT Act, it is not permissible for the dealers to argue that the price as indicated in the tax invoice should not have been taken into consideration but the net purchase price after discount is to be the basis." 22. In ALD Automotive Pvt. Ltd's case (supra) Section 19(11) of Tamilnadu VAT Act, 2006 which imposes time limit for claiming input tax credit was challenged on the ground that it was arbitrary and violative of Articles 14 and 19(1)(g) of the Constitution of India. IN that context while upholding the time prescription U/s 19(11) of the said Act the Apex Court on the following aspects observed thus: (i) Interpretation of taxing statutes: "36. This Court had the occasion to consider the Karnataka Value Added Tax Act, 2013 in State of Karnataka v. M.K. Agro Tech. (P) Ltd. This Court held that it is a settled proposition of law that taxing statutes are to be interpreted literally and further it is in the domain of the legislature as to how much tax credit is to be given under what circumstances.....
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.... (a) ITC is a form of concession provided by the legislature. It is not admissible to all kinds of sales and certain specified sales are specifically excluded. (b) Concession of ITC is available on certain conditions mentioned in this section. (c) One of the most important condition is that in order to enable the dealer to claim ITC it has to produce original tax invoice, completed in all respect, evidencing the amount of input tax. 38. This Court further held that it is a trite law that whenever concession is given by a statute the conditions thereof are to be strictly complied with in order to avail such concession." (iii) Constitutional validity of Section 19: "39. The constitutional validity of Section 19(20) was upheld. The above decision is a clear authority with proposition that input tax credit is admissible only as per conditions enumerated under Section 19 of the Tamil Nadu Value Added Tax Act, 2006. The interpretation put up by this Court on Sections 3(2) and 3(3) and Section 19(2) is fully attracted while considering the same provisions of Sections 3(2) and 3(3) and the provision of Section 19(11) of the Act. The statut....
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....andatory requirements of the provision. (Emphasis Supplied) 39. The availment of Input Tax Credit is creature of Statute. The concession of Input Tax Credit is granted by the State Government so that the beneficiaries of the concession are not required to pay the tax or duty which they are otherwise liable to pay under TN VAT Act. While so extending the concession, it is open to the Legislature to impose conditions. Section 19(11) is one such condition imposed making it mandatory for the registered Dealer to claim Input Tax Credit before the end of the financial year or before ninety days from the date of purchase, whichever is later. The entitlement to claim Input Tax Credit is created by TN VAT Act and the terms on which Input Tax Credit can be claimed must be strictly observed." Regarding constitutional validity of fiscal legislation, the Court further observed thus: "61. Constitutional Validity of Fiscal Legislation: When there is a challenge to the Constitutional validity of the provisions of a Statute, Court exercising power of judicial review must be conscious of the limitation of judicial intervention, particularly, in matters relating to th....
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....nce to the time limit, such credits should be allowed to be transferred during the process of migration. Any such view would hamper the effective implementation of the new tax structure and would also lead to endless disputes and litigations. As noted in case of USA Agencies (supra), the Supreme Court had upheld the vires of a statutory provision contained in the Tamil Nadu Value Added Tax Act which provided that the dealer would have to make a claim for input tax credit before the end of the financial year or before ninety days of purchase; whichever is later. The vires was upheld observing that the Legislature consciously wanted to set up the time frame for availment of the input tax credit. Such conditions therefore must be strictly complied with. Thus, merely because the rule in question prescribes a time frame for making a declaration, such provision cannot necessarily be held to be directory in nature and must depend on the context of the statutory scheme." 25. Though above decisions deal with ITC claim related to the concerned State laws, however since concept of ITC is one and the same, those decisions will equally apply to the case on hand. Thus, it is clear that ITC be....