TaxTMI 
TaxTMI 
2026 (7) TMI 220
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....Excise, Chennal South Commissionerate, M.H.U Complex, Anna Salai, Nandanam, Chennai-35, within 30 days of receipt of this notice, as to why:- (i) an amount of Rs. 103,45,34,884/- (Rupees One Hundred and Three Crore Forty Five Lakhs Thirty Four Thousand Eight Hundred and Eighty Four only) (IGST - Rs. 21,22,00,856/-, CGST - Rs. 41,11,67,014/- and SGST - Rs. 41, 11, 67,014/-) being ineligible ITC availed by the taxpayer should not be demanded from them under the provisions of sub section (1) of Section 74 of the CGST/TNGST Act, 2017 read with Section 20 of the IGST Act, 2017; (ii) an amount of Rs. 62,83,59,982/- (Rupees Sixty Two Crore Eighty Three Lakhs Fifty Nine Thousand Nine Hundred and Eighty Two only) (IGST Rs. 5,61,81,198/-, CGST Rs. 28,60,89,392/-, SGST Rs. 28,60,89,392/- being the ITC paid by the taxpayer through DRC-03 under debit entry No. D13309210473867 dated 28.09.2021 for the period from July 2017 to July 2021 should not be appropriated against the demand mentioned at sl.no. (i) above. (iii) an amount of Rs. 26,24,33,923/- (Rupees Twenty Six Crore Twenty Four Lakhs Thirty Three Thousand Nine Hundred and Twenty Three only) (IGST -Rs.1,10,55,237....
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.... the CGST Act, 2017 provides for determination of tax not paid or short paid or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of facts and reads as follows: (1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund erroneously been made, or who has wrongly availed or utilised input tax cred the notice along with interest payable thereon under section 50 and a per requiring him to show cause as to why he should not pay the amount specified equivalent to the tax specified in the notice. The section covers certain situations for demand and recovery of taxes in cases of fraud, or any kind of wilful mis-statement or suppression of facts with an intent to evade payment of tax. "Fraud" is normally understood as deceit with an intent to obtain an unjust advantage ....
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....t and a penalty leviable under the provisions of the Act or Rules made thereunder The relevant extract of Sections 74 is reproduced below for ready reference: Section 74. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any willful misstatement or suppression of facts.. (1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice. (11) Where any person served with an order issued under subsection (9) pays the tax along with interest payable thereon under s....
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....ion of ineligible ITC is under dispute in the present case, interest is applicable and the same is required to be recovered from the noticee as per the provisions of Section 50(3) of the CGST/TNGST Act, 2017 made applicable to Integrated tax as per Section 20 of IGST Act, 2017. 21.4 In view of the above, I find that the noticee is liable to pay interest under Section 50(3) of the CGST Act, 2017, on the demand confirmed in paragraph 12. 22 In view of the above discussions and findings, I proceed to pass the following order under Section 74(9) of CGST/TNGST Act, 2017 made applicable to IGST vide Section 20 of IGST Act, 2017. i) 1 confirm the demand of Rs. 92,29,09,162/- (CGST Rs. 40,28,23,949/, SGST Rs. 40,28,23,949/- and IGSTRs. 11,72,61,264/-) (Rupees Ninety-Two Crores, Twenty-Nine Lakh, Nine Thousand, One Hundred and Sixty-Two Only) being ineligible ITC availed by the noticee as discussed in Para 12 above for the period from July 2017 to March 2023 under Section 74(1) read with Section 74(9) of the CGST/TNGST Act, 2017 as applicable to IGST vide section 20 of the IGST Act, 2017 and drop the remaining demand of Rs. 11,16,25,722/- (CGST Rs. 83,43,065/-, SG....
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....vailed Input Tax Credit on the following items: (i) construction materials (ii) capital goods used in construction activities (iii) sanitary and plumbing materials (iv) electrical and electronic goods which are used or installed in the buildings (v) services relating to architecture landscaping, construction services / labour contracts, works contract services (including sub contract services), selling and marketing expenditure etc. 5. The petitioner availed Input Tax Credit, in light of the decision of the Orissa High Court in Safari Retreats Pvt. Ltd. vs. Chief Commissioner of CGST [2019 (25) GSTL 341], which was rendered on 17.04.2019. 6. In light of the above decision of the Orissa High Court in Safari Retreats Pvt. Ltd. vs. Chief Commissioner of CGST, the petitioner submitted a representation dated 16.08.2019 and informed the respondent that the petitioner was entitled to avail the Input Tax Credit. Paragraph 4 of the said communication dated 16.08.2019 reads as under:- "4. In line with the above ruling, we now wish to claim the input tax credit in respect of inputs, input services and capital goods for the tax period....
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....as given by the respondent to the petitioner in response to the aforesaid representation / communication dated 16.08.2019. 9. As against the aforesaid approval sought for Rs. 22,51,11,167/-, the petitioner appears to have ended up availing a total input tax credit of Rs. 1,03,45,34,884/-, and thereafter, made a partial reversal, as stated in the impugned order and the show cause notice that preceded the impugned order. 10. The total Input Tax Credit availed by the petitioner pursuant to the aforesaid letter is Rs. 26,47,05,814/-. Thereafter, Input tax credit was availed for the balance period starting from July 2017 to July 2021. Thus, a sum of Rs. 1,03,45,34,884/- was availed as detailed below: Period IGST CGST SGST Total July 2017 - July 2021 21,22,00,856 41,11,67,014 41,11,67,014 1,03,45,34,884 11. Subsequently, the petitioner has reversed a sum of Rs. 89,07,93,903/- on 28.09.2021 for the period from July 2017 to July 2021 and for the rest of the period as detailed below: Period IGST CGST SGST Total July 2017 - July 2021 5,61,81,198 28,60,89,392 28,60,89,392 62,83,59,982 Aug 2021 - Sep 2022 1,10,55,237 ....
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....there was a declaration on 16.08.2016, the question of suppression of facts with any intent does not arise. The learned Senior Counsel further draws attention to the decision of the Hon'ble Supreme Court in Carona Ltd., vs.Parvathy Swaminathan & Sons, reported in 2007 8 SCC 559, wherein the relevant paragraph reads as under:- "26. The learned counsel for the appellant company submitted that the fact as to "paid-up share capital" of rupees one crore or more of a company is a "jurisdictional fact" and in absence of such fact, the Court has no jurisdiction to proceed on the basis that the Rent Act is not applicable. The learned counsel is right. The fact as to "paid-up share capital" of a company can be said to be a "preliminary" or "jurisdictional fact" and said fact would confer jurisdiction on the Court to consider the question whether the provisions of the Rent Act were applicable. The question, however, is whether in the present case, the learned counsel for the appellant tenant is right in submitting that the "jurisdictional fact" did not exist and the Rent Act was, therefore, applicable." 18. It is submitted that, in the absence of any foundational facts, the extens....
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....cause notice. The Petitioner will have to face the show cause notice and can canvass all arguments before the authority concerned, including the issues raised in the present writ petition." (ii) M/s Rahul Steels Through its Authorised Signatory Rahul Gandnhi and others vs. Union of India and Others in WP.No.8015 of 2024 dated 17.12.2024, wherein it is held as follows:- "10. In order to prove the circular trading as explained by way of diagram in the page 20 of the common show Cause Notice, said notice has rightly been issued and the joint assessment proceedings are liable to be undertaken under Section 74 of the CGST Act, 2017 by the proper Officer. Hence, the petitioners cannot be singled out from this assessment proceedings by entertaining this writ petition." 22. The learned Senior Standing Counsel submits that the decision of the Orissa High Court has been reversed by the Hon'ble Supreme Court in Chief Commissioner of Central Goods and Services Tax & Others vs. Safari Retreats (P) Ltd & Ors. reported in (2025) 2 SCC 523. 23. I have considered the arguments advanced by the learned Senior Counsel for the petitioner and the learned Senior Standing Counsel f....
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....in mind the provisions of Section 16(1)(2) where restriction has been put forward by the legislation for claiming eligibility for input credit has been described in Section 16(1) and the benefit of apportionment is subject to Section 17(1) and (2). While considering the provisions of Section 17(5)(d), the narrow construction of interpretation put forward by the Department is frustrating the very objective of the Act, inasmuch as the petitioner in that case has to pay huge amount without any basis. Further, the petitioner would have paid GST if it disposed of the property after the completion certificate is granted and in case the property is sold prior to completion certificate, he would not be required to pay GST. But here he is retaining the property and is not using for his own purpose but he is letting out the property on which he is covered under the GST, but still he has to pay huge amount of GST, to which he is not liable. 20. In that view of the matter, in our considered opinion the provision of Section 17(5)(d) is to be read down and the narrow restriction as imposed, reading of the provision by the Department, is not required to be accepted, inasmuch as keeping i....
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.... classification is underinclusive and creates discrimination. In this case, equals are not being treated as unequals. The test of vice of discrimination in taxing law is less rigorous. Ultimately, the legislature was dealing with a complex economic problem. By no stretch of the imagination, clauses (c) and (d) of Section 17(5) can be said to be discriminatory. No amount of verbose and lengthy arguments will help the assessee's prove the discrimination. In the circumstances, it is not possible for us to accept the plea of clauses (c) and (d) of Section 17(5) being unconstitutional. ..... 65. Some of our conclusions can be summarised as under: a. The challenge to the constitutional validity of clauses (c) and (d) of Section 17(5) and Section 16(4) of the CGST Act is not established; b. The expression "plant or machinery" used in Section 17(5) (d) cannot be given the same meaning as the expression "plant and machinery" defined by the explanation to Section 17; c. The question whether a mall, warehouse or any building other than a hotel or a cinema theatre can be classified as a plant within the meaning of the expression "plant or machinery"....
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....d in the course or furtherance of business. Explanation.- For the purposes of this Chapter and Chapter VI, the expression "plant and machinery" means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes- (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. 35. The restrictions contained in the above clauses will not apply in the case of construction of "plant and machinery". The Explanation to Section 17 explicitly defines the expressions 'construction' and 'plant and machinery'. 36. The petitioner will have no occasion to utilize the Input Tax Credit for discharging the tax liability on the renting of immovable property. 37. As mentioned above, the petitioner could not have availed input tax credit, even otherwise belatedly, in view of the restrictions under Section 16(4) of the respective GST enactments. The fact remains that the department had not accepted the decision and had eventually approached th....