Niket Bipinbhai Patel, through Power of Attorney Holder Bipinbhai Madhavbhai Patel Vs. Assistant Commissioner (A.E.), CGST & Central Excise, Vadodara-II Commissionerate (Gujarat High Court)
In Niket Bipinbhai Patel v. Assistant Commissioner (A.E.), CGST & Central Excise (Gujarat High Court), the Court quashed a show cause notice issued under Section 74 of the CGST Act, holding that input tax credit (ITC) availed on charges related to transfer of leasehold rights did not fall within the blocked credit provisions under Section 17(5)(d), which applies only to construction of immovable property. The Court observed that there was no material to establish fraud, wilful misstatement, or suppression of facts—mandatory conditions for invoking Section 74—and noted that the petitioner had already reversed the utilised ITC. Concluding that the proceedings reflected misinterpretation of statutory provisions and non-application of mind, the Court set aside the demand and directed restoration of the blocked ITC.
Fact of the case:- Petitioner is an individual who has acquired leasehold rights over a Gujarat Industrial Development Corporation (GIDC), Ankleshwar plot from Syngenta India Limited and is engaged in the business of undertaking sub-plotting activities and subsequently transferring the leasehold rights of such sub-plots to various purchasers.
For transferring the leasehold rights of the sub-plots, the Petitioner is required to pay various charges to GIDC, such as sub-divisional charges, NU penalty, miscellaneous administrative charges, transfer fees and other statutory dues necessary for effecting the transfer. GIDC levies GST on these charges, and since such expenses are directly and intrinsically linked to the Petitioner’s business activities, the Petitioner has duly availed the corresponding Input Tax Credit (ITC).
