Malaya Rub-Tech Industries Vs Union of India (Tripura High Court)
The petitioner, a partnership firm engaged in the rubber business across various parts of India including Tripura, was registered under the CGST Act, 2017 and SGST Act, 2017. For manufacturing finished products, it purchased input materials from respondent No.7 during the period 08.03.2018 to 30.11.2018. According to the petitioner, it paid the due taxes on such purchases and utilized the materials in the course of manufacture, thereby becoming entitled to Input Tax Credit (ITC). The petitioner claimed it was under a bona fide belief that respondent No.7 had deposited the tax collected from it.
On 14.01.2021, respondent No.6 issued a show cause notice under Section 73(1) of the CGST Act, 2017 alleging that for the tax period August 2017 to July 2019, tax had not been paid or ITC had been wrongly availed or utilized, proposing recovery of Rs.22,09,964.04. The petitioner replied on 29.12.2021. However, by order dated 17.02.2022, respondent No.6 held that ITC had been unauthorizedly claimed and directed payment of the said amount. The petitioner challenged this order.
The petitioner contended that the show cause notice was vague and contradictory and that Section 16(2)(c) was wrongly invoked. It argued that there was no statutory mechanism to compel the supplier to deposit tax and that it could not be penalized for the supplier’s default in remitting tax collected from it.
