TaxTMI 
TaxTMI 
2026 (9) TMI 153
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....d 07.11.2024, passed by the Joint Commissioner of Commercial Taxes (Appeals)-6, Bengaluru ("the First Appellate Authority"), under Section 107 of the CGST/KGST Act. The First Appellate Authority dismissed the Appellant's first appeal and upheld the order dated 20.04.2024 (Reference No. ZD290424050852A, Form GST DRC-07), passed under Section 73(9) of the 1.2. This dispute relates to the tax period April 2018 to March 2019 (Financial Year 2018-19). The Revenue alleges that the Appellant availed excess Input Tax Credit ("ITC"). The alleged excess arises from a difference between the credit reflected in FORM GSTR-2A and the credit availed by the Appellant in FORM GSTR-3B. 1.3. According to the Revenue, the Appellant availed excess ITC of Rs.2,33,502/- (CGST Rs.1,16,751/- and SGST Rs.1,16,751/-). This amount, along with interest of Rs.2,03,730/- and penalty of Rs.23,350/-, was confirmed under Section 73, aggregating to Rs.4,60,582/-. 1.4. The Appellant disputes this. It contends that the difference is not an excess claim at all, but arises because ITC pertaining to Financial Year 2017-18 was availed in Financial Year 2018-19, within the time permitted under Section 16(4). T....
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....officer's calculations. To see if this demand is correct, we must check how the officer figured out the numbers, starting from the original tax match-up down to the final interest and penalties. 3.1. The tax demand is based on differences found when matching up the Input Tax Credit (ITC) claimed in FORM GSTR-3B during the 2018-19 financial year. The officer wrote down these exact calculations and differences in FORM GST DRC-01 and its attached documents, but the full tables showing these calculations are not copied here. 3.2. On this basis, the Show Cause Notice computed interest under Section 50(1) at 1.5% per month on the mismatched amount of Rs.1,16,751/- under each of the CGST and SGST heads, working out to Rs.1,01,865/- under each head, and penalty under Section 73(11) at 10%, amounting to Rs.11,675/- under each head. Particulars CGST (Rs.) SGST (Rs.) Total (Rs.) Difference in ITC claim (GSTR-3B vs GSTR-2A) 1,16,751 1,16,751 2,33,502 Interest @ 1.5% u/s 50(1) 1,01,865 1,01,865 2,03,730 Penalty @ 10% u/s 73(11) 11,675 11,675 23,350 Total payable 2,30,291 2,30,291 4,60,582 D. Findings Recorded by the Proper....
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....the judgment of the Hon'ble Karnataka High Court in Microqual Techno Ltd. v. State of Karnataka [STA No. 01/2010, decided on 6-8-2010], which held that where an input tax credit claim is not based on a genuine transaction, it amounts to an attempt to evade tax, and such a claim, not being a bona fide act of the assessee, is liable to be disallowed. On this basis, the First Appellate Authority found that the Appellant had failed to establish satisfactory compliance with Section 16(2)(c) read with Section 155 of the Act, and upheld the disallowance of ITC. F. Submissions on Behalf of the Appellant 6. Learned Authorised Representative Shri Akash A Parmar CA, appearing for the Appellant reiterated the grounds urged in the memorandum of appeal and assailed the impugned orders both on facts and in law. It was submitted that: 6.1. Reconciliation of ITC: The alleged excess claim is not an excess claim at all. It arises because ITC pertaining to Financial Year 2017-18 was availed in Financial Year 2018-19, within the time permitted under Section 16(4), and this very credit is reflected in the Appellant's GSTR-2A of Financial Year 2017-18, not 2018-19. Comparing GSTR-3B of o....
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....onfirmed, and the appeal should be dismissed. However, the learned Departmental Representative fairly submitted that the Revenue did not object to the Appellant's prayer for remand of the matter. H. Issues for Determination 8.We have heard the learned Authorised Representative for the Appellant and the learned Departmental Representative for the Respondents. We have examined the record, the pleadings, the statutory provisions, and the judicial precedents cited before us. The following issues arise for our determination: (i). Whether the difference between the ITC claimed in GSTR-3B and the ITC reflected in GSTR-2A for FY 2018-19 can be treated as inadmissible without examining the Appellant's explanation that part of it relates to FY 2017-18 invoices claimed within the Section 16(4) window? (ii). Whether the Order-in-Original is vitiated by the absence of a personal hearing? (iii). Whether the absence of a notice in FORM GST ASMT-10 renders the proceedings invalid? (iv). To what relief, if any, is the Appellant entitled? I. Tribunal's Analysis and Findings 9. We examine the applicability of the above authorities to the pre....
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.... the mismatch between GSTR-3B and GSTR-2A. The three judgments therefore rest on facts and statutory provisions materially different from the present case, and could not have been relied upon to disallow the credit. Finding: Issue No. 1 is answered in favour of the Appellant. The demand cannot be sustained on the record as it stands, without invoice-wise verification of the Financial Year 2017-18 credit. 9.2. Issue No. 2 - Whether the Order-in-Original is vitiated by the absence of a personal hearing? The Show Cause Notice records the date, time and venue of personal hearing as "NA." Section 75(4) makes a hearing mandatory once an adverse decision is contemplated against the person, irrespective of whether a specific request for hearing was made. The absence of any such hearing before the Order-in-Original was passed is a clear infirmity. The Appellant has relied on Sahara India (Firm) v. CIT, [2008] 169 Taxman 328 (SC), and a line of High Court decisions applying Section 75(4), including Gayathri Agencies v. State Tax Officer (Madras HC), A.H. Enterprises v. Deputy Commercial Tax Officer (Madras HC), and Goutam Bhowmik v. State of West Bengal (Calcutta HC), for the pro....
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....o back to the Proper Officer for fresh verification, after a proper opportunity of personal hearing. Since the sustainability of the demand turns on verification of facts not undertaken below, and since the Order-in-Original was itself passed without a hearing, this is not a case where the Tribunal can finally determine the ITC claim on the present record; remand, rather than a final decision on merits, is the appropriate relief. The Appellant has relied on Prathibha Processors v. Union of India, 1996 (88) ELT 12 (SC), for the proposition that interest, being compensatory, and penalty, being consequential, cannot survive independently of a sustainable principal demand. We agree with the proposition of law laid down in this decision. However, since the sustainability of the principal demand of Input Tax Credit has not, for the reasons recorded under Issues No. 1 and 2 above, been finally determined after affording the Appellant a proper opportunity of hearing, it would be premature to record a finding on the correctness of the demand of tax, interest and penalty at this stage. The applicability of this decision shall accordingly abide by the outcome of the fresh adjudication dire....