Court admitted writ challenging amendment to Rule 61(5) of CGST Rules

Sakthi Industries Vs Union of India (Madras High Court)

The Hon’ble Madras High Court in M/s. Sakthi Industries v. Union of India [W.P.No.26901 dated September 12, 2023] admitted the writ challenging amendment to Rule 61(5) of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”) and directed the Petitioner to pay 10% of the disputed amount within a period of 4 weeks to get the interim stay from all further proceedings. This article delves into the details of the case, including the facts, analysis, and conclusion.

Facts:

M/s. Sakthi Industries (“the Petitioner”) availed Input Tax Credit (“ITC”) which as per the Revenue Department is beyond the limitation prescribed under Section 16(4) read with Section 39 of the CGST Act (“the CGST Act”) read with Rule 61(5) of the CGST Rules and accordingly issued the demand cum show cause notice.

Thereafter, the Adjudicating Authority vide an Order dated July 25, 2023 (“the Impugned Order”) on the ground that the ITC availed by the Petitioner being beyond the time limit prescribed under Section 16(4) confirmed the demand.

Aggrieved by the Impugned Order the Petitioner filed writ before the Hon’ble Madras High Court challenging the Impugned Order.

Held:

The Hon’ble Madras High Court in W.P.No.26901 of 2023  held as under:

• Noted that, the Petitioner has availed ITC, which, according to the Respondent is beyond the limitation prescribed under Section 16(4) read with Section 39 of CGST Act read with Rule 61(5) of the CGST Rules.
• Further noted that, the petitioner has also challenged the amendment to Rule 61(5) of the CGST Rules vide Notification No.49/2019 – Central Tax dated October 09, 2019.
• Stated that, the Petitioner has an alternate remedy and challenged the impugned order on the strength of the challenge to the amendment to Rule 61(5) of the CGST Rule vide Notification No.49/2019 – Central Tax dated October 09, 2019. Therefore, the court admitted the writ.
• Directed the Petitioner to pay 10% of the disputed tax that as confirmed vide the Impugned order within four weeks. Subject to such compliance, there shall be an interim stay of all further proceedings.
• Listed the matter on October 10, 2023.

Conclusion

The case of M/s. Sakthi Industries vs. Union of India before the Madras High Court highlights the complexities and legal intricacies surrounding the availing of Input Tax Credit under the CGST Act and related rules. The Court’s decision to admit the writ based on the challenge to the CGST Rule amendment sets an important precedent in the realm of GST taxation law. As the case unfolds, it will be closely watched for its potential impact on taxpayers and the broader interpretation of GST rules.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

Mr. Santhanaraman, learned Standing Counsel takes notice on behalf of the first, second, fourth and fifth respondents and Mr.C.Harsharaj, learned Additional Government Pleader takes notice on behalf of the third respondent.

2. The petitioner has challenged the impugned Assessment Order dated 25.07.2023 in Form GST DRC-07.

3. The petitioner appears to have availed Input Tax Credit, which, according to the respondents is beyond the limitation prescribed under Section 16(4) read with Section 39 read with Rule 61(5) of the Central Goods and Services Tax (CGST) Rules, 2017.

4. The petitioner has also challenged the amendment to Rule 61(5) of the CGST Rules vide Notification No.49/2019 – Central Tax (CT) dated 09.10.2019 in W.P.No.26908 of 2023. As the petitioner has an alternate remedy and challenged the impugned order on the strength of the challenge to the amendment to Rule 61(5) of the CGST Rule vide Notification No.49/2019 – Central Tax (CT) dated 09.10.2019 in W.P.No.26908 of 2023, this Court is inclined to admit these two writ petitions.

5. The petitioner shall however pay 10% of the disputed tax that has been confirmed vide impugned order dated 25.07.2023 within a period of four weeks from today. Subject to such compliance, there shall be an interim stay of all further proceedings.

6. List these cases on 10.10.2023. The respondents to file their counter, if any by then.

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