R V Enterprises & Anr. Vs State of Gujarat & Ors. (Gujarat High Court)
Gujarat High Court recently delivered a significant judgment in the case of R V Enterprises & Anr. Versus State of Gujarat & Ors., largely upholding the reversal of Input Tax Credit (ITC) but quashing the penalty imposed on the petitioner. The ruling, delivered under Article 227 of the Constitution of India, addressed critical aspects of GST law, particularly concerning Section 16(2)(c) of the CGST/SGST Act, 2017, and the implications of a supplier’s non-payment of tax.
Case Background and Petitioner’s Claims
R V Enterprises, a partnership firm registered under the GST Act, availed ITC on plastic item purchases during the financial year 2017-2018. The petitioner asserted that its suppliers were GST-registered, provided valid invoices and e-way bills, and that the ITC details were auto-populated in Form GSTR-2A on the GSTN portal, based on which the credit was claimed. The firm subsequently filed its annual return in Form GSTR-9, declaring an ITC of Rs. 3,49,324/- each under SGST and CGST.
The dispute arose when the respondent authorities issued a show cause notice in Form GST DRC-01 on September 28, 2023, under Section 73 of the GST Act. This notice sought to disallow an ITC of Rs. 6,98,648/-, alleging that the credit was availed from a supplier whose registration was cancelled due to non-payment of outward tax liability. Crucially, the petitioner contended that this show cause notice was issued without a prior intimation in Form GST DRC-01A, thereby denying them an opportunity to respond.
