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Case Law Details

Case Name : Aakash Gupta Vs Commissioner of Delhi Goods And Services Tax & Ors. (Delhi High Court)
Appeal Number : W.P.(C) 12694/2023
Date of Judgement/Order : 13/02/2024
Related Assessment Year :

Aakash Gupta Vs Commissioner of Delhi Goods And Services Tax & Ors. (Delhi High Court)

In a significant ruling, the Delhi High Court issued a stay on the proceedings against Aakash Gupta in a case concerning the misuse of Delhi Value Added Tax (DVAT) registration for availing wrongful Goods and Services Tax (GST) Input Tax Credit (ITC). This case, Aakash Gupta Vs Commissioner of Delhi Goods And Services Tax & Ors., puts a spotlight on the complexities and potential vulnerabilities within the transition framework from DVAT to GST.

The petitioner, Aakash Gupta, was accused in a Show Cause Notice dated 27th February 2023, of wrongfully availing input tax credit, a crucial component of the GST system that allows businesses to reduce their tax liability by the amount of GST paid on purchases. The counsel for the petitioner argued that Gupta was registered under the DVAT Act, 2004, prior to the enactment of the CGST Act, 2017, and had applied for cancellation of his DVAT registration without seeking migration to the GST scheme.

It emerged that an unauthorized use of Gupta’s credentials led to the availing of input tax credit, suggesting a breach or misuse of the system. The respondents have been directed to trace out individuals who allegedly used the petitioner’s DVAT Registration for migrating to the GST Scheme fraudulently. The petitioner’s stance is supported by the fact that his DVAT Registration was officially cancelled on 1st April 2017, indicating no intention to migrate to GST.

Delhi HC Stay DVAT Registration Misused for GST ITC Availment

The court has granted time to the respondents to gather and present documents and materials relevant to the alleged wrongful migration and availment of ITC. In the interim, the Delhi High Court has stayed further proceedings on the Show Cause Notice until the next hearing scheduled for 21st February 2024.

This stay order by the Delhi High Court highlights the challenges in the transition from DVAT to GST, especially regarding the security and integrity of taxpayer information and the migration process. It raises critical questions about the safeguards against unauthorized use of taxpayer credentials and the mechanisms for addressing grievances within the GST framework. As the case progresses, it will be interesting to see how the court addresses these systemic issues and what measures will be implemented to prevent such occurrences in the future, ensuring a smoother and more secure transition for taxpayers.

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. Petitioner impugns the Show Cause Notice dated 27.02.2023 whereby the petitioner is alleged to have availed wrongful input tax credit.

2. Learned counsel for the petitioner submits that petitioner was registered under the Delhi Value Added Tax Act, 2004 [hereinafter referred as ‘DVAT Act’] prior to the enactment of the Central Goods and Services Act, 2017 [hereinafter referred as ‘CGST Act’]. He submits that petitioner had applied for cancellation of his DVAT Act Registration and never applied for migration to the GST Scheme. However, it appears that someone wrongfully used his credentials and appears to have availed input tax credit.

3. He submits that the respondents have traced out the individuals who alleged to have wrongfully used petitioner’s DVAT Registration for migrating to GST Scheme. He submits that the petitioner never applied for migration and the dealer profile of the petitioner shows that the petitioner never applied for migration and the DVAT Registration was cancelled on 01.04.2017.

4. Learned counsel for respondent No.3 prays for some more time to take instructions. Respondent No.3 shall place on record the documents and material available in their record with regard to the alleged migration of the petitioner from DVAT to GST Scheme.

5. At request, list on 21.02.2024. In the meantime further proceedings on the Show Cause Notice shall remain stayed.

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