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Case Law Details

Case Name : Gokul Enterprises Vs Deputy Commissioner of State Tax (Kerala High Court)
Appeal Number : WP(C) NO. 36029 OF 2023
Date of Judgement/Order : 01/11/2023
Related Assessment Year :
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Gokul Enterprises Vs Deputy Commissioner of State Tax (Kerala High Court)

The recent judgment by the Kerala High Court in the case of Gokul Enterprises vs Deputy Commissioner of State Tax has significant implications for businesses navigating Input Tax Credit (ITC) claims under the Central Goods and Service Tax Act, 2017. The petitioner sought relief from an assessment order and recovery notice, challenging the constitutionality and validity of specific provisions.

Detailed Analysis:

The petitioner’s plea centered around Section 16(2)(c) of the CGST Act, 2017, and corresponding provisions in the Kerala State Goods and Service Tax Act, 2017. The contention was that these sections, along with Sub Rule (4) of Rule 36 of the CGST and Kerala State GST Rules, were unconstitutional, arbitrary, and violated fundamental rights under Article 14, Article 19(1)(g), and Article 300A of the Constitution of India.

The learned counsel argued that the issue at hand had already been addressed in previous judgments, specifically referring to the court’s decision in WP (C) No. 30949 of 2023 and WP (C) No. 33214 of 2023, both dated 03.10.2023. The government pleader did not contest this assertion.

In a decisive move, the Kerala High Court allowed the writ petition, quashing the assessment order (Ext.P1) and recovery notice (Ext.P2). The court directed the petitioner, Gokul Enterprises, to present all relevant documents before the assessing authority within ten days. The assessing authority was instructed to thoroughly examine the documents and, if satisfied with the bona fide nature of the petitioner’s Input Tax Credit claim, issue a revised order.

Conclusion:

The judgment sets a precedent for businesses dealing with Input Tax Credit disputes, offering clarity on the constitutionality of certain provisions. The Court’s emphasis on a fair examination of relevant documents underscores the importance of a transparent and objective approach in tax matters. Gokul Enterprises’ success in this case marks a significant development in the evolving landscape of GST litigation, providing a ray of hope for businesses seeking just resolutions to tax-related challenges.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

1. The present writ petition has been field for the following reliefs:-

“(i) Issue a Writ or certiorari or any other appropriate writ, order or direction, quashing Ext.P1 assessment order and Ext.P2 recovery notice.

(ii) To declare section 16(2)(c) of the Central Goods and Service Tax Act, 2017 and the Kerala State Goods and Service Tax Act, 2017 and Sub Rule (4) of Rule 36 of the Central Goods and Service Tax Rules and Kerala State Goods and Service Tax Rules as unconstitutional, arbitrary, discriminatory and violative of Article 14, Article 19(1)(g) and Article 300A of the constitution of India.

(iii) Declaring / reading down Section 16(2)(c) of the Central Goods and Service Tax Act 2017 being ultra vires Section 16(1) and objective of the Central Goods and Services Tax Act, 2017.

(iv) Grant such other relief as may be prayed for and as this Hon’ble Court may deem fit in the circumstances of the case.”

2. The learned counsel for the petitioner submits that issue involved in the present writ petition is covered by the judgment of this Court dated 03.10.2023 passed in WP (C) No. 30949 of 2023 as well as in WP (C) No. 33214 of 2023.

3. Mrs. Jasmin M.M, learned Government Pleader does not dispute the said contention of the learned counsel for the petitioner.

4. In view thereof, the present writ petition is allowed and the impugned Ext.P1 order and Ext.P2 notice are set aside. The petitioner is directed to appear before the assessing authority within ten days with all relevant documents. The assessing authority will examine the documents and if satisfies that the petitioner’s claim for the Input Tax Credit is bonafide, a revised order should be passed.

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