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2024 Supreme(Guj) 1579
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Bhargav D. Karia, Niral R. Mehta, JJ.
Shree Balaji Engineering Services – Petitioner
Versus
Union Of India & Ors.- Respondents
R/Special Civil Application No. 11281 of 2024
Decided On : 02-08-2024
Advocate Appeared:
For the Petitioner: Mr Punit B Juneja
For the Respondent: Mr Raj Tanna, AGP
IMPORTANT POINT
The court established that taxpayers must utilize available statutory remedies before approaching the court for relief regarding tax disputes.
Headnote:
GST - Input Tax Credit - Section 16(2)(c), Section 74, Section 107 - The court discussed the provisions of the GST Act, particularly focusing on the validity of input tax credit claims and the appeal process under Section 107, ultimately deciding to relegate the petitioner to pursue statutory remedies.
Fact of the Case:
The petitioner claimed input tax credit while filing tax returns but faced disallowance due to alleged invalid claims from suppliers with cancelled GST registrations, leading to a recovery order from the tax authority.
Finding of the Court:
The court found that the impugned order was appealable under Section 107 of the GST Act and that the petitioner had an alternative remedy available, thus not entertaining the writ petition at this stage.
Issues: Whether the petitioner could challenge the disallowance of input tax credit and the recovery order without first pursuing the available statutory remedy under Section 107 of the GST Act.
Ratio Decidendi: The court emphasized the importance of exhausting alternative statutory remedies before seeking judicial intervention, referencing the precedent set in a related Supreme Court case.
Result: The petition is disposed of, directing the petitioner to pursue the statutory remedy under Section 107 of the GST Act.
ORDER :
BHARGAV D. KARIA, J.
1. Heard learned advocate Mr.Punit B.Juneja for the petitioner and learned AGP Mr.Raj Tanna for the respondent no.3.
2. By this petition under Article 227 of the Constitution of India, the petitioner has prayed for the following reliefs:
“a. The Hon'ble Court be pleased to admit and allow the present petition;
b. That this Hon'ble Court declare Section 16(2)(c) of the CGST/Gujarat GST Act 2017 as ultra vires to the Constitution, and thereby null and void;
c. This Hon'ble Court be pleased to quash and set aside the order No ZD24052402203W dated10/05/2024 under Section 74 of the SGST Act 2017 directing the recovery of Rs 7,23,19,739/ including the penalty of Rs 2,73,39,330/- and Interest of Rs 1,75,18,679/- and Fee 1,72,400/- for Financial Year 2020-2021 passed by The State Tax Officer Ghatak 7 Ahmedabad Range 2 Division 1 Gujarat; (Annexure A)
d. That the Court direct the respondents to allow the input tax credit as originally claimed by the petitioner for the relevant periods.
e. Pending admission and final hearing of this petition the Hon'ble Court be pleased to stay the operation and execution of the order No ZD24052402203W dated 10/05/2024 under Section 74 of the SGST Act 2017 directing the recovery of Rs 7,23,19,739/- including the penalty of Rs 2,73,39,330/- and Interest of Rs 1,75,18,679/- and Fee 1,72,400/- for Financial Year 2020-2021 passed by The State Tax Officer Ghatak 7 Ahmedabad Range 2 Division 1 Gujarat (Annexure A);
f. This Hon'ble Court be pleased to grant any other and further relief that may be deemed fit and expedient in the interest of justice.”
3. The brief facts of the case are that the petitioner during the course of its business with different entities regularly filed tax returns with the authority by taking input tax credit.
3.1. It is the case of the respondent that the petitioner had taken input tax credit for three different firms namely, Bhagwat Enterprise, Santosh Kumar Tiwari (S.K.Engineering Services) and Chaudhary Oshi Ashokkumar (Ashooan Consultancy Services).
3.2. It is the case of the petitioner that the petitioner firm made payments to all the above firms with an amount of GST.
3.3. The intimation in Form DRC-01A dated 18.07.2023 was issued followed by a show- cause notice in Form DRC-01 dated 05.08.2023 on various grounds of which consisted as under:
(i) Availing input tax credit on the supplies received by the petitioner from the firms whose GST Number was cancelled, as no valid returns under Section 39 of the GST Act were filed by the aforesaid firms. There was an interest on the delayed filing of the returns, late fees for not filing of GSTR-9 and GSTR-9C forms and the petitioner has also not paid GST on reverse charge mechanism. There is also an issue of reversal of the ITC for creditors to whom the payment has not been made after 180 days of purchases.
3.4. The petitioner filed detailed reply to the show-cause notice on 04.09.2023. After considering the reply, the impugned order dated 10.05.2024 was passed under Section 74 of the Gujarat Goods and Service Tax Act, 2017 (for short ‘GST Act’) by the respondent Authority.
4. Learned advocate Mr.Juneja for the petitioner submitted that the respondent authorities could not have disallowed the input tax credit claimed by the petitioner in view of the fact that the petitioner has submitted in detail about the receipt of the goods as well as payment of GST while making payment to the suppliers.
4.1. It was submitted that the petitioner is ready and willing to pay the interest and late filing fees as well as the amount on reverse charge mechanism which was alleged to have been not paid in the impugned order.
4.2. It was submitted that the petitioner has challenged the Vires of Section 2(C) of the GST Act and therefore the petition is required to be entertained as the petitioner could not have been saddled with the GST liability of the supplier. Learned advocate Mr.Juneja also referred to the reply filed by the petitioner, wherein
