TaxTMI 
TaxTMI 
2026 (9) TMI 1099
X X X X Extracts X X X X
X X X X Extracts X X X X
....exure A1) along with summary order in Form DRC-07 bearing reference no. ZD240725000580T dated 01.07.2025 (Annexure A2) passed for the F.Y. 2021-22 as well as subsequent rectification order bearing reference no. ZD240725005705I dated 02.07.2025 (Annexure A3); b. A writ of certiorari, or any other appropriate writ, order and/or directions in the nature of certiorari to quash the Order-in-Appeal no. VAD CGST-002-APP-JC-939-2025-26 dated 27.02.2026 (Annexure B1) along with Form GST APL-04 bearing order no. ZD240326010836K dated 05.03.2026 (Annexure B2) c. A writ of mandamus, or any other appropriate writ, order and/or directions in the nature of mandamus directing the Respondent to refund the tax of Rs. 29,25,000/- paid through DRC-03 dated 21.01.2023 and interest of Rs. 4,44,280/- paid through DRC-03 dated 22.12.2023.; d. Pending the admission, hearing and final disposal of this petition, stay the order-in-original dated 12.06.2025 (Annexure A1) and order-in-appeal dated 27.02.2026 (Annexure B1) and/or restrain the respondents to continue and/or initiate the recovery proceedings pursuant to the impugned orders; e. Pass any other order(s) as this Hon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....yable was issued in Form GST DRC-01A bearing DIN20240365VB0000D4A9, dated 05.03.2024, calling upon the petitioner to make payment of penalty. The petitioner submitted a reply on 13.03.2024 contending that the tax along with applicable interest had already been paid under protest through Form DRC-03 during the course of investigation. It was further submitted that all requisite information and documents had been duly furnished during the investigation proceedings, and that, there was neither any wilful misstatement nor suppression of facts, nor any fraudulent intent to evade tax. It was contended that no penalty was leviable in the facts and circumstances of the case. However, without considering the same, Show Cause Notice bearing DIN20240565VB000000060, dated 31.03.2024, was issued by the Deputy Commissioner (Prev.), CGST & Central Excise, Vadodara-II Commissionerate, proposing disallowance and recovery of ITC amounting to Rs. 29,25,000/-, along with applicable interest and penalty under Section 74(1) of the CGST Act on the allegation that the said ITC constituted blocked credit under Section 17(5)(d) of the CGST Act. 3.4 In response thereto, the petitioner filed a detailed sub....
X X X X Extracts X X X X
X X X X Extracts X X X X
....operty. The bar on credit applies exclusively to construction related expenditure. In the present case, the petitioner herein has not undertaken any construction activity. The petitioner has merely acquired the leasehold rights in the GIDC plots as it is. Accordingly, in absence of any construction of immovable property, the provision of section 17(5)(d) of the CGST Act is erroneously invoked in the case of the petitioner. 4.1 Learned advocate, Mr. Hardik V. Vora also submitted that the core issue is pertaining to ITC availed by the petitioner on acquisition of leasehold rights of GIDC plot. The respondents have failed to appreciate that the very foundation of the impugned proceedings is contrary to the settled legal position as held in Gujarat Chamber of Commerce and Industry & Ors. (Supra), wherein, it is held that the provisions of section 7(1)(a) of the CGST Act providing for supply read with clause 5(b) of Schedule II and clause 5(c) of Schedule III would not be applicable to such transaction of assignment of leasehold rights of land and building and the same would not be subject to levy of GST as provided under section 9 of the CGST Act. In the facts of the present case, a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... books of accounts and reported in the GST returns. It is submitted that during inquiry under Section 67(1) of the CGST Act, statement of Shri Rameshchandra - partner of the Firm, was recorded on 16.01.2026 under section 70 of the CGST Act wherein, he admitted that ITC was availed on GST paid towards leasehold rights and also conveyed that they were ready to reverse the ITC along with applicable interest through Form DRC-03 in order to ensure full compliance of law. Accordingly, without waiting for initiation of any proceeding, the petitioner voluntarily reversed the entire ITC to the tune of Rs. 29,25,000/- vide Form DRC-03 on 21.01.2023 and also discharged the applicable interest to the tune of Rs. 4,44,280/- vide Form DRC-03, dated 22.12.2023. In view of the aforesaid, the revenue issued show cause notice proposing disallowance and recovery of ITC of Rs. 29,25,000/- along with interest and penalty under section 74(1) of the CGST Act. It is submitted that the department alleged that ITC was inadmissible and it pertains to blocked credit under section 17(5)(d) of the CGST Act and further claimed that the petitioner had suppressed material facts with intent to evade the payment of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r of Commerce and Industry & Ors.(Supra), has held that the assignment by sale or transfer of the leasehold rights of the plot allotted by the GIDC to the lessee in favour of the third party-assignee for a consideration shall be assignment/sale/transfer of benefits arising out of "immovable property" by the lessee-assignor in favour of third party assignee, who would become lessee of GIDC in place of original allottee-lessee. Under such circumstances, provisions of section 7(1)(a) of the CGST Act providing for scope of supply read with clause 5(b) of Schedule II and clause 5 of Schedule III shall not be applicable to such transaction of assignment of leasehold rights of land and building and the same would not be subject to levy of GST as provided under section 9 of the CGST Act. The Coordinate Bench of this Court after extensive scrutiny of the provision of the GST as well as the array of judgments has ultimately declared as under:- "83. In view of foregoing reasons, assignment by sale and transfer of leasehold rights of the plot of land allotted by GIDC to the lessee in favour of third party-assignee for a consideration shall be assignment/sale/ transfer of benefits aris....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dentical issue raised in Special Civil Application No.18068 of 2025, section 17(5)(d) of the CGST Act was interpreted and it was held that the legislative intent is clear that the bar on credit applied exclusively to construction related expenditure and the apportionment of credit and blocked credits relating to such business. 8.2. At this stage, it is apposite to refer to the decision rendered in Special Civil Application No.18068 of 2025, dated 10.02.2026. Relevant paragraphs of the said decision read thus: "9. At this stage, we may refer to the provision of Section 17(5)(d) of the GST Act, which is as under: "Apportionment of credit and blocked credits. 17. (1) Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business. ..... (5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely:- .... (d) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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. Explanation "suppression" shall mean non-declaration of facts or information which a taxable person is required to declare in the return, statement, report or any other document furnished under this Act or the rules made thereunder, or failure to furnish any information on being asked for, in writing, by the proper officer." 11. Thus, we do not find that in the instant case, there is any fraud or wilful mis-statement or any suppression of facts at the end of the petitioner in availing the ITC or the same is wrongly availed. On the contrary, it has not been denied by the respondent that, the petitioner had, though utilised the ITC of Rs. 38,60,608/- in the month ....