Case Law Details
P Murugan Vs Commercial Tax Officer (Madras High Court)
Madras High Court held that challenge to the show cause notices in Form DRC-01 dated 18.12.2024 is premature. However, court directed respondent to complete proceedings within 5 weeks period since respondent has blocked Input Tax Credit on allegation that credit is availed on the basis of fake invoices issued by non-existent taxpayer.
Facts- The petitioner is registered taxpayer under the Goods and Services Tax Act, 2017. During the relevant period, the petitioner had filed its return and paid the appropriate taxes. While so, show cause notices in Form GST DRC-01 dated 18.02.2025 were issued to the petitioner through GST portal, alleging that the petitioner was in receipt of the Inward supplies of goods and services from the non-existent taxpayer were in issuance of fake invoices/without actual supply of goods and services for the year 2023-24. Therefore, the Input Tax Credit was blocked by the respondents. According to the petitioner, that the transactions of inward supplies from the suppliers are bonafide, as such the issue of fake invoices, does not arise.
It is also submitted that pursuant to the issuance of show cause notices dated 18.02.2025, the petitioner had submitted his reply along with documentary evidence. Since the Input Tax Credit was blocked by the respondents, the petitioner was unable to operate his business transactions. Hence, the petitioner has filed the present Writ Petitions.
Conclusion- It appears that challenge to the show cause notices in Form DRC-01 dated 18.12.2024 is premature. In the present case, the petitioner had submitted his reply to the said show cause notices issued by the first respondent along with documentary evidence. It is also pointed out that the reason for filing the present Writ Petitions is to get immediate relief to unblock the input tax credit. The learned counsel for the respondents contented that, since the petitioner have dealt with fake invoices, the respondent authority have blocked the Input Tax Credit. In response, the learned counsel for the petitioner submitted that all the invoices have disclosed in GSTR-1, there is no question of fake invoices. If that is the case, these are the factual issues, this Court cannot decide the same in writ proceedings. Since the petitioner had already submitted his reply along with documentary evidence to the said show cause notices, the respondents may consider the same and pass appropriate orders in accordance with law.
Held that the respondents are directed to consider the reply filed by the petitioner along with the documentary evidence to the show cause notices dated 18.02.2025 and issue a 7 days clear notice by fixing the date for personal hearing to the petitioner. If the respondent-Authority comes to the conclusion that the petitioner’s case is not pertaining to fake invoices, the respondents are directed to consider the request of the petitioner, for unblocking of Input Tax Credit. The above said exercise shall be completed within a period of five (5) weeks from the date of receipt of a copy of this order.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Since the issue involved and the relief sought in both these Writ Petitions are identical in nature, the same were heard together and are disposed of vide this common order.
2. Challenging the impugned Show Cause Notices dated 18.02.2025 passed by the first respondent under Rule 100(2) and 142(1) (a) of CGST Act and also for consequential direction to the respondents to Unblock the negatively blocked Input Tax Credit.
3. It is submitted by the learned counsel for the petitioner that the petitioner is doing business under the name and style of M/s. Aarupadai and Co., and is registered taxpayer under the Goods and Services Tax Act, 2017. During the relevant period viz., 2023-2024, the petitioner had filed its return and paid the appropriate taxes. While so, show cause notices in Form GST DRC-01 dated 18.02.2025 were issued to the petitioner through GST portal, alleging that the petitioner was in receipt of the Inward supplies of goods and services from the non-existent taxpayer were in issuance of fake invoices/without actual supply of goods and services for the year 2023-24. Therefore, the Input Tax Credit was blocked by the respondents. According to the petitioner, that the transactions of inward supplies from the suppliers are bonafide, as such the issue of fake invoices, does not arise.
4. It is also submitted that pursuant to the issuance of show cause notices dated 18.02.2025, the petitioner had submitted his reply along with documentary evidence. Since the Input Tax Credit was blocked by the respondents, the petitioner was unable to operate his business transactions. Hence, the petitioner has filed the present Writ Petitions.
5. Mr. V. Prashanth Kiran, learned Government Advocate (Taxes) appearing for the respondents submitted that the petitioner’s reply to the said show cause notices dated 18.02.2025 would be considered by the respondents and pass orders, after affording an opportunity of personal hearing to the petitioner, within a time frame that may be stipulated by this Court.
6. Heard the learned counsel for the petitioner as well as the learned Government Advocate for the respondents and also perused the materials available on record.
7. Considering the submissions made by the learned counsel on either side, it appears that challenge to the show cause notices in Form DRC-01 dated 18.12.2024 is premature. In the present case, the petitioner had submitted his reply to the said show cause notices issued by the first respondent along with documentary evidence. It is also pointed out that the reason for filing the present Writ Petitions is to get immediate relief to unblock the input tax credit. The learned counsel for the respondents contented that, since the petitioner have dealt with fake invoices, the respondent authority have blocked the Input Tax Credit.
7.1. In response, the learned counsel for the petitioner submitted that all the invoices have disclosed in GSTR-1, there is no question of fake invoices. If that is the case, these are the factual issues, this Court cannot decide the same in writ proceedings. Since the petitioner had already submitted his reply along with documentary evidence to the said show cause notices, the respondents may consider the same and pass appropriate orders in accordance with law.
8. In view of the above, this Court is inclined to issue the following directions:
i. The respondents are directed to consider the reply filed by the petitioner along with the documentary evidence to the show cause notices dated 18.02.2025 and issue a 7 days clear notice by fixing the date for personal hearing to the petitioner.
ii. If the respondent-Authority comes to the conclusion that the petitioner’s case is not pertaining to fake invoices, the respondents are directed to consider the request of the petitioner, for unblocking of Input Tax Credit.
iii. The above said exercise shall be completed within a period of five (5) weeks from the date of receipt of a copy of this order.
9. With the above observations and directions, these Writ Petitions are disposed of. No costs. Consequently, connected Miscellaneous Petitions are closed.
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