Case Law Details
Goodyear India Limited Vs State Tax Officer (Kerala High Court)
Introduction: Goodyear India Limited recently contested a GST notice in the Kerala High Court, challenging allegations of wrongful input tax credit. The court, in its order, disposes of the petition, urging the petitioner to explore the statutory appeal process under the CGST/SGST Act.
Detailed Analysis: The petitioner, a dealer under the CGST/SGST Act, engaged in trading of tyres and tubes, received a show cause notice under Section 73(1) of the CGST/SGST Act. The notice claimed that the petitioner wrongly availed input tax credit, leading to a demand of Rs. 5,18,317, including tax and interest. The petitioner, in response, submitted a detailed reply, emphasizing correct credit availing under Section 140(3) of the CGST Act.
Despite the petitioner’s contentions, the assessing authority, through an order dated 20.10.2023, upheld the demand in the show cause notice, declaring the availing of TRAN-II credit as irregular. The authority recommended remitting the matter back to the Government.
The petitioner, represented by learned counsel, argued the correctness of the credit availed, highlighting subsequent returns where TRAN-II credit was allowed. However, the court, noting the availability of the statutory appeal process under the CGST/SGST Act, declined to examine the assessment order.
The court disposed of the writ petition, granting liberty to the petitioner to file an appeal under Section 107 of the CGST/SGST Act before the appellate authority. The petitioner, if filing the appeal within three weeks, is assured a decision on merits without delving into the question of limitation. The court specified a requirement for the petitioner to deposit 10% of the assessed tax, keeping the remaining demand in abeyance until the appeal’s finalization.
Conclusion: The Goodyear India vs State Tax Officer case illustrates the significance of pursuing statutory remedies in GST matters. The Kerala High Court’s disposition emphasizes the avenue of appeal under the CGST/SGST Act, ensuring a comprehensive review of the case while maintaining a balance between judicial intervention and the established legal process. This judgment underscores the importance of exhausting available remedies before seeking extraordinary relief from the court.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The present writ petition has been filed by the petitioner, who is a dealer under the Central Goods and Services Tax Act/State Goods and Services Tax Act, 2017 (‘CGST/SGST Act’, for short). The petitioner is engaged in trading of tyres and tubes falling under the Tariff Heading 4011. The petitioner was issued a show cause notice under Section 73(1) of the CGST/SGST Act in Ext.P1 stating that the petitioner had wrongly availed input tax credit under the CGST for Rs.2,61,335/-, which would attract interest and penalty, and the total demand was worked out to be Rs.5,18,317/-, including tax and interest. The petitioner was also asked to show cause as to why the said tax along with penalty equivalent to 10% or Rs.10,000/- should not be realised from him, in case of failure to make payment of the entire amount of tax as above. The petitioner filed reply in Ext.P2 to the said show cause notice and submitted that the petitioner had a closing stock report as on 30.6.2017, as per which the quantity claimed as per the transitional credit of input tax credit in TRAN-I-(A) was 5966, besides the quantity disclosed in TRAN-2 for the goods sold was 628. It is further said that the petitioner had appropriately transitioned the credit amounting of Rs.2,61,335/- in GST as per the provisions of Section 140(3) of the CGST Act. Hence, the petitioner requested to drop the said show cause notice.
2. The assessing authority, however, did not agree with Ext.P2 reply to the show cause notice and vide the assessment order dated 20.10.2023 in Ext.P5 held that the petitioner had registration under the provisions of the Kerala Value Added Tax regime (Central Excise and Service Tax) and availing of ITC under Rule 117(4)(a)(1) of the CGST Rules, 2017 on goods held in stock on the appointed day is violation of the Act and the Rules. Therefore, the petitioner could not have availed TRAN-II credit under the CGST and the said availment of the TRAN-II credit under the CGST was irregular, and that the matter should be remitted back to the Government. The demand in the show cause notice was upheld.
3. Learned counsel for the petitioner submits that the petitioner had availed the correct credit, which is evident from the subsequent returns filed by the petitioner in which the TRAN-II credit was allowed to the petitioner.
4. The petitioner has remedy of statutory appeal under the provisions of the CGST/SGST Act. Therefore, the petitioner ought to have filed appeal, instead of approaching this Court.
5. Considering the availability of alternate remedy of statutory appeal, this Court is not inclined to examine the assessment order. Therefore, the present writ petition is disposed of with liberty to the petitioner to file appeal under Section 107 of the CGST/SGST Act before the appellate authority. If the petitioner approaches the appellate authority in appeal within a period of three weeks from today, the appeal shall be decided on merits without going into the question of limitation. However, the petitioner should deposit 10% of the tax assessed without interest and penalty. If the petitioner deposits 10% of the assessed tax as above, the remaining demand shall be kept in abeyance till finalisation of the appeal by the appellate authority.
Pending interlocutory application, if any, in the present writ petition stands dismissed.
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