Case Law Details
Ansil Ibrahim Vs Assistant Commissioner second Circle (Kerala High Court)
In a recent judgment, the Kerala High Court dismissed a writ petition filed by Ansil Ibrahim, the proprietor of ‘M/s Light House,’ against the Assistant Commissioner Second Circle. The case revolved around the denial of input tax credit (ITC) under the CGST and SGST Acts. We will delve into the details of the case and the court’s rationale in this article.
1. Background of the Case: Ansil Ibrahim, operating under the business name ‘M/s Light House,’ had his claim for an ITC of Rs. 98,479 under both CGST and SGST denied by the Assessing Authority. Additionally, interest charges of Rs. 92,031 under CGST and SGST, as well as penalties of Rs. 10,000 each, were imposed. This resulted in a total tax, interest, and penalty assessment of Rs. 4,01,020.
2. Show Cause Notice and Lack of Response: The petitioner received a show cause notice under Section 73(1) of the CGST/SGST Act in September 2021. However, Ansil Ibrahim did not respond to the notice, nor did he appear for the personal hearing scheduled for February 16, 2022.
3. Basis of Denial of ITC: The Assessing Authority based its denial of ITC on the absence of any material provided by the petitioner to substantiate his claim, except for Form GSTR 2A and GSTR 3B. Section 16 of the CGST/SGST Act 2017 prescribes the conditions for claiming ITC, and the burden of proof rests with the registered person (Section 155).
4. Petitioner’s Relinquishment of Right: The petitioner’s failure to respond to the show cause notice and lack of evidence effectively meant that Ansil Ibrahim had given up his right to prove his claim for the input tax credit. In such a scenario, the court found no merit in entertaining the writ petition.
5. Conclusion: The Kerala High Court’s decision in the case of Ansil Ibrahim vs. Assistant Commissioner Second Circle emphasizes the importance of responding to show cause notices and providing evidence when claiming input tax credit under the GST Act. The burden of proof lies with the claimant, and the failure to meet this burden can result in the denial of the credit. In this instance, the court rejected the writ petition, given the petitioner’s lack of response and supporting evidence. This judgment serves as a reminder to businesses to comply with GST regulations and fulfill their obligations to avoid adverse consequences.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
Heard Mr A Krishnan, learned Counsel for the petitioner, Mr Akhil Shaji, holding for Mr Sreelal Warrier learned Standing Counsel for the Central GST and Ms Jasmin M M, learned Government Pleader.
2. The present writ petition under Article 226 of the Constitution of India has been filed by the petitioner, who is running a proprietorship firm by the name and style ‘M/s Light House’. The Assessing Authority, in assessment proceedings under the provisions of the GST Act, denied the claim of the petitioner for an input tax credit of Rs.98,479/- under the CGST and the same amount under the SGST. The Assessing Authority has levied interest of Rs.92,031/- under the CGST and the same amount under the SGST, and Rs.10,000/- each penalty has been imposed under the CGST and SGST. The total tax, interest and penalty has been assessed at Rs.4,01,020/-. The petitioner was issued a show cause notice under Section 73(1) of the CGST/SGST Act 2017 on 16.09.2021. The petitioner did not reply to the said show cause notice, nor did the petitioner appear for a personal hearing, which was fixed on 16.02.2022. The Assessing Authority verified the input tax credit as per GSTR 2A and return as per GSTR 3B for the tax period 2017-18.
3. As the petitioner did not appear in pursuance of the show cause notice nor did he provide any document or evidence to discharge his burden under Section 155 of the GST Act, the Assessing Authority has no other material before them except for Form GSTR 2A and GSTR 3B. The Assessing Authority, therefore, denied the claim of input tax credit of the petitioner.
4. Section 16 of the CGST/SGST Act 2017 prescribes the conditions for being eligible to claim input tax credit. Sub- section (2) of Section 16 begins with a non-obstante clause, and it provides thus:
“16. Eligibility and conditions for taking input tax credit.—
xxx xxx xxx
(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,––
(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;
(b) he has received the goods or services or both.
Explanation.—For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services––
(i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;
(ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person.
(ba) the details of input tax credit in respect of the said supply communicated to such registered person under Section 38 has not been restricted;
(c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through the utilisation of input tax credit admissible in respect of the said supply; and
(d) he has furnished the return under section 39:
Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment:
Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on a reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed:
Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon. ….”
4.1 There is another provision, i.e., Section 155 of the GST Act, which is in respect of the burden on the dealer for claiming input tax credit. Section 155 on reproduction reads as under:
“155. Burden of proof.—Where any person claims that he is eligible for input tax credit under this Act, the burden of proving such claim shall lie on such person.”
If there is a difference between GSTR 2A and GSTR 3B, then it is for the assessee/dealer to prove his claim of input tax credit by leading cogent and credible evidence for his claim regarding input tax credit.
5. In the present case, the petitioner, despite show cause notice, chose not to provide any evidence in respect of his claim for the input tax credit, nor did he appear for a hearing on the date fixed. When the petitioner himself has given up his right to prove his claim for the input tax credit, this Court cannot help such an assessee by entertaining this writ petition. Therefore, I find no substance in the present writ petition, which is hereby rejected.
