Case Law Details
Alpha City Chennai IT Park Projects Private Limited Vs STO (Madras High Court)
The Madras High Court recently addressed a significant case involving Alpha City Chennai IT Park Projects Private Limited against the State Tax Officer regarding the denial of GST transitional credit/Input Tax Credit worth Rs. 14 lakhs. The lack of clarity in the show cause notice (SCN) prompted the court’s intervention, leading to crucial directives to provide clear reasons for the denial.
The case revolves around an order dated 27.12.2023, where the petitioner, a construction company, received a show cause notice on 25.09.2023 regarding the denial of GST transitional credit/Input Tax Credit. Despite requesting additional time to respond, the petitioner’s concerns over the lack of clarity in the notice remained unaddressed. The petitioner’s argument highlighted the absence of specific reasons for the denial of transitional credit amounting to Rs. 14,05,211/-.
The court noted discrepancies in the show cause notice, emphasizing the necessity for clear grounds for calling upon the petitioner to justify the ineligible Input Tax Credit (ITC). It was observed that the impugned order primarily confirmed the tax demand due to the petitioner’s failure to submit documents or attend a personal hearing. However, the court found that the petitioner’s reply dated 07.11.2023, though submitted manually, should have been duly considered.
In light of these observations, the court issued directives to treat the impugned order as a show cause notice. The State Tax Officer was directed to furnish a supplementary explanation outlining the reasons for denying transitional credit to the petitioner within two weeks. Subsequently, the petitioner was granted an opportunity to respond, followed by a directive for the State Tax Officer to issue a fresh order within two months post-receipt of the petitioner’s reply.
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