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IN THE HIGH COURT OF RAJASTHAN AT JAIPUR BENCH
MANINDRA MOHAN SHRIVASTAVA, PRAVEER BHATNAGAR, JJ.
Hindustan Unilever Limited - Petitioner
Versus
Union Of India – Respondent
D.B. Civil Writ Petition No. 13617 of 2023
Decided On : 06-09-2023
| Table of Content |
|---|
| 1. court hearings and representation (Para 1 , 2 , 3) |
| 2. challenges regarding itc matching mechanism (Para 4 , 5) |
| 3. court's analysis on statutory obligations (Para 6) |
| 4. next steps and listing for hearing (Para 7 , 8 , 9) |
ORDER :
Heard.
2. Learned counsel for Union on India Shri Devesh Yadav under instructions of learned ASG takes notice on behalf of respondent Nos.1 & 4.
3. Learned Additional Advocate General Shri R.P. Singh assisted by Mr. Jaivardhan Singh Shekhawat takes notice on behalf of respondent Nos.2 & 3.
4. The petitioner raises an issue with regard to absence of proper mechanism of matching of credit note of supplier with the ITC reversal by the recipient. It appears that earlier there was a provision under Section 43 of the CGST Act/RGST Act obligating the matching exercises to be undertaken by the department. That provision later on has been omitted.
5. Learned counsel for the petitioner would submit that it is not practically possible for the petitioner to submit certificate after obtaining the same from the recipient as proof of reversal of credit by the recipient, in order to avail reduction of tax liability. Instead it is for the department to undertake the matching exercise and the claim of reduction in tax liability should not be made dependent upon production of any certificate or proof of reversal of ITC by the recipient.
6. We find that the validity of the provision is being challenged more on the ground of workability. For the present we find that in the absence of their being any statutory obligation cast on the respondent to undertake matching exercise, if the petitioner is willing to claim reduction in tax liability, proof of reversal by the recipient is to be provided by the supplier. In the present case, the petitioner has challenged the validity of the provision more on the grounds of difficulty in collecting such certificate/proof from the recipient. Even according to the petitioner he has been able to collect such certificate/proof in some cases.
7. This matter is required to be considered on the next date of hearing.
8. Though we are not granting any interim order at this stage, learned counsel for Union of India is directed to place before the Court appropriate suggested mechanism.
9. List the matter on 05.10.2023.
Proper verification of transactions and the requirement for a match of details in claims of Input Tax Credit, as mandated by Section 42(3) of the CGST Act, are crucial for the assessment process.
The petitioner must follow statutory remedies before challenging tax demands and provide proof of ITC reversal as required by Section 15(3)(b)(ii) of the CGST Act.
[The judgment establishes that while Input Tax Credit (ITC) should not be denied solely based on procedural errors, strict compliance with the statutory provisions of the CGST Act is essential for av....
Authority must follow prescribed procedures for disallowing input tax credit as per the relevant circular when incorrect GSTIN is declared.
Legislative provisions imposing conditions on Input Tax Credit eligibility based on supplier compliance are found iniquitous; bona fide purchasers must not be unduly penalized for supplier defaults.
The court ruled that inadvertent misclassification of IGST as CGST and SGST does not constitute excess credit utilization, especially when no revenue loss occurs.
Input Tax Credit cannot be compelled to be reversed without due process, and restoration is required if reversal occurs under duress.
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