R V Enterprises & Anr. Vs State of Gujarat & Ors. (Gujarat High Court)
The petitioners filed a writ petition under Article 227 of the Constitution seeking, among other reliefs, quashing of the show cause notice dated 28.09.2023 issued under Section 73 of the GST Act, the order in Form GST DRC-07 dated 31.12.2023, and a declaration reading down Section 16(2)(c) of the CGST/SGST Act so that denial of Input Tax Credit (ITC) would apply only to recipients who colluded with defaulting suppliers and not to bona fide purchasers.
The petitioner, a registered partnership firm, had availed ITC during Financial Year 2017-18 on purchases from registered suppliers of plastic goods. According to the petitioner, the suppliers had valid GST registrations, issued invoices and e-way bills, and the relevant ITC was auto-populated in Form GSTR-2A. The petitioner also filed Form GSTR-9 declaring ITC of Rs. 3,49,324 each under SGST and CGST. Subsequently, a show cause notice under Section 73 proposed disallowance of ITC amounting to Rs. 6,98,648 on the ground that the supplier’s registration had been cancelled due to non-payment of outward tax. During the pendency of the writ petition, an order-in-original in Form GST DRC-07 was passed raising demand of Rs. 15,48,204 along with interest of Rs. 3,89,846 each under the SGST and CGST Acts and penalty of Rs. 34,932 each.
