Merely exercising option under composite scheme cannot prevent Revenue from GST recovery

Merely exercising option under composite scheme cannot prevent Revenue Department from demanding recovery of GST

The Hon’ble Andhra Pradesh High Court in Godway Furnicrafts vs. the State of AP [Writ Petition No. 10350 of 2020, dated November 11, 2020] confirmed the demand for recovery of Goods and Services Tax (GST) by Revenue Department and held that merely because the assessee has exercised an option under the composite scheme and that it took time for the Revenue Authorities to verify the genuineness, it cannot prevent them from directing the assessee to pay tax, if the option exercised was found to be incorrect.

Facts:

Godway Furnicrafts (“the Petitioner”) is engaged in the business of furniture. The Petitioner’s claim for payment of tax under the composite scheme was rejected on the ground that the turnover of the Petitioner for the “previous year” under the Value Added Tax (“VAT”) regime was INR 2.09 crores. Revenue Department (“the Respondent”) issued a Show Cause Notices (“SCNs”) in terms of Section 74 and Section 10(5) of the Central Goods and Services Tax Act, 2017 (“CGST Act”), stating that the Petitioner was liable to pay GST @28% from the date of initial registration.

Further, an explanation to the SCNs were given twice by the Petitioner, but the same was rejected by the Respondent, confirming the demand along with interest and penalty. Subsequently, the Petitioner preferred an appeal, challenging the order passed by the Respondent, but the same was also rejected. Being aggrieved by the order passed, the present writ petition has been filed.

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