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Case Law Details

Case Name : Vijayshanthi Hardware Vs Assistant Commissioner (ST)(FAC) (Madras High Court)
Appeal Number : W. P. No. 7017 of 2024
Date of Judgement/Order : 19/03/2024
Related Assessment Year : 2021-2022

Vijayshanthi Hardware Vs Assistant Commissioner (ST)(FAC) (Madras High Court)

Section 16 of The Central Goods And Services Tax Act, 2017 delves into Input Tax Credit (ITC) and its eligibility criteria along with conditions for claiming the credit. A recent judgment by the Madras High Court sheds light on the implications of wrongly availing ITC and subsequent reversals, emphasizing the importance of compliance.

The petitioner’s case revolves around the purchase of a car in the assessment year 2021-2022 and the erroneous availing of Input Tax Credit in relation to it. Despite reversing the ITC in the GSTR 3B return, an order dated 11.07.2023 was issued, prompting the petitioner to challenge it.

The petitioner’s counsel highlighted the reversal of Rs. 73,690 each towards CGST and SGST in the GSTR 3B return, along with a further debit of Rs. 71,706 from the petitioner’s electronic credit ledger post the impugned order.

Acknowledging the petitioner’s submission, the court observed discrepancies between the impugned order and the documented reversal of ITC. Consequently, the court quashed the order and remanded the matter for reconsideration. The petitioner was granted an opportunity to respond to the show-cause notice dated 19.04.2023 and submit relevant documents within two weeks.

The assessing officer was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh assessment order within two months of receiving the petitioner’s reply.

Section 16 of The Central Goods And Services Tax Act, 2017 governs the eligibility and conditions for claiming Input Tax Credit, ensuring proper compliance with tax regulations. The Madras High Court’s judgment underscores the significance of accurate reporting and reversal of ITC, setting a precedent for adherence to statutory requirements in tax matters.

Through this analysis, it becomes evident that adherence to procedural norms and documentation is paramount in availing and reversing Input Tax Credit, as non-compliance may lead to legal challenges and subsequent reconsideration of assessment orders.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

An order dated 11.07.2023 is the subject of challenge in this writ petition.

2. The petitioner states that he had purchased a car in the assessment year 2021-2022. Since he had wrongly availed of Input Tax Credit (ITC) in relation thereto, it is stated that such ITC was reversed in the GSTR 3B return filed subsequently. In spite of such reversal, it is stated that the impugned order was issued.

3. Learned counsel for the petitioner invited my attention to the GSTR 3B return and pointed out that a sum of Rs.73,690/- each towards CGST and SGST was reversed under the said return. He also pointed out that subsequent to the impugned order, a further sum of Rs.71,706/- was debited from the electronic credit ledger of the petitioner.

4. Mr. K.Vasanthamala, learned Government Advocate, accepts notice for the respondent. She points out that the impugned order was issued in view of the respondent not being aware of the reversal in the GSTR 3B return.

5. The petitioner has placed on record the GSTR 3B return for the month of April in the assessment year 2023-2024. Such return indicates the reversal of ITC to the extent of Rs.73,690/- each towards CGST and SGST. On examining the impugned order, it is evident that such impugned order proceeds on the basis that ITC of Rs.73,690/- each towards CGST and SGST was wrongly availed of. In other words, the said order proceeds on the basis that ITC was not reversed. In light of documents placed on record by the petitioner, the said order requires reconsideration.

6. For reasons set out above, the impugned order dated 11.07.2023 is quashed and the matter is remanded for reconsideration. The petitioner is permitted to file a reply to the show cause notice dated 19.04.2023 and to submit all relevant documents along with such reply. Such reply shall be submitted within a maximum period of two weeks from the date of receipt of a copy of this order. Upon receipt thereof, the assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within a period of two months from the date of receipt of the petitioner’s reply.

7. The writ petition is disposed of on the above terms. There will be no order as to costs. Consequently, connected miscellaneous petitions are closed.

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