Case Law Details
Unity Ooh Media Solutions Pvt. Ltd. Vs Deputy State Tax Officer (Kerala High Court)
Introduction: The Kerala High Court recently addressed a crucial case involving the rejection of Input Tax Credit (ITC) due to a supplier’s failure to file GSTR-1 on time. In the matter of Unity Ooh Media Solutions Pvt. Ltd. vs. Deputy State Tax Officer, the court remanded the case to the assessing authority, challenging the assessment order (Ext.P2).
Background: Unity Ooh Media Solutions Pvt. Ltd., an assessee under the GST/CGST Act, filed GSTR-1 and GSTR-3B returns for the period July 2017 to March 2018. The company claimed input tax credit for the tax period on goods purchased from registered dealers. However, the 1st respondent issued notices due to the petitioner’s failure to respond to show cause notices. The assessment order (Ext.P2) denied a portion of the claimed input tax credit, citing the non-filing of GSTR-1 by certain suppliers before the due date.
Detailed Analysis: The primary contention of the petitioner, as argued by their counsel, is that they were denied the opportunity to represent their case before the 1st respondent. The petitioner faced initial difficulties in navigating the GST portal, preventing them from filing replies and participating in the assessment process. The denial of input tax credit in Ext.P2 was solely based on the suppliers’ non-compliance with GSTR-1 filing deadlines.
The learned counsel for the petitioner referred to a relevant judgment (WP(C) No. 30660 of 2023) and emphasized the petitioner’s right to a fair hearing. The judgment in Diya Agencies v. The State Tax Officer highlighted that denial of input tax credit merely on the grounds of GSTR-2A non-reflection is unsustainable. The court, in that case, directed the assessing officer to provide an opportunity for the assessee to substantiate their claim with evidence.
In light of this precedent, the Kerala High Court, acknowledging the difficulties faced by the petitioner in the new GST regime, remanded the matter back to the assessing authority. The court directed the assessing authority to consider the issue afresh, allowing the petitioner an opportunity to present evidence supporting their claim for input tax credit.
Conclusion: The Kerala High Court’s decision to remand the case underscores the importance of a fair hearing and the need for assessing authorities to consider the challenges faced by taxpayers. The judgment sets a precedent for cases where denial of input tax credit is solely based on procedural issues, emphasizing the right of taxpayers to present evidence and be heard in a tax assessment process. This legal development serves as a reminder of the evolving landscape of GST-related disputes and the courts’ role in ensuring procedural fairness.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The present writ petition has been filed impugning Ext.P2 assessment order. The petitioner, an assessee under the provisions of the GST / CGST Act, 2017 (the Act for short) had filed GSTR -1 and GSTR – 3B returns for the period July 2017 to March 2018 till the financial year 2017-2018 and had claimed input tax credit for the tax period on purchase of goods, effected from registered dealers, in accordance with law, through the GSTIN online portal. The petitioner was issued notices from the GSTIN portal. The petitioner could not file a reply to the notices issued. In the absence of reply to the show cause notices issued and personal hearing, the 1st respondent passed assessment order in Ext.P2, allowing certain amount of input tax credit as claimed in Ext.P1 return by the petitioner for the assessment year 2017-2018. The only reason for denying the input tax credit in Ext.P2 order is that though the petitioner had filed GSTR 1 and GSTR 3B within the enlarged time, since certain suppliers had not filed GSTR- 1 before the due date ie 30.04.2019, the entire ITC claim had been rejected under Section 16(4)of the Act.
2. Learned counsel for the petitioner submits that petitioner did not have the opportunity of representing this case before the 1st respondent in absence of the notices and initial difficulties in understanding in implementation of the GST, an all together new tax regime. Many like the petitioner did not get access to the GST portal, as a result, the petitioner could not file reply and without hearing him the impugned order has been passed, whereby certain claim for input tax credit has been denied.
3.Learned counsel for the petitioner also placed reliance on judgment of this court in WP(C) No. 30660 of 2023 [M/s Henna Medicals Bus Stand Road vs State Tax Officer] in which relying on paragraph 8 of Diya Agencies v. The State Tax Officer dated 12.09.2023 in WP(C) No. 29769/2023, the writ petition was allowed. Paragraph 8 of Diya Agencies (supra) would be read as under:-
“8. In view thereof, I find that the impugned Exhibit P-1 assessment order so far denial of the input tax credit to the petitioner is not sustainable, and the matter is remanded back to the Assessing Officer to give opportunity to the petitioner for his claim for input tax credit. If on examination of the evidence submitted by the petitioner, the assessing officer is satisfied that the claim is bonafide and genuine, the petitioner should be given input tax credit. Merely on the ground that in Form GSTR-2A the said tax is not reflected should not be a sufficient ground to deny the assessee the claim of the input tax credit. The assessing authority is therefore, directed to give an opportunity to the petitioner to give evidence in respect of his claim for input tax credit. The petitioner is directed to appear before the assessing authority within fifteen days with all evidence in his possession to prove his claim for higher claim of input tax credit. After examination of the evidence placed by the petitioner/assessee, the assessing authority will pass a fresh order in accordance with law.”
4. Considering the aforesaid fact, the matter is remitting back to the file of the assessing authority, 1st respondent to consider the issue afresh in the light of judgment in Diya Agencies (supra) and pass a fresh order after hearing the petitioner. The petitioner is directed to appear before the Assessing officer on 05.0 1.2024, with all evidence and report denying the input tax credit, which is evident in Ext.P1 order.
For the aforesaid direction, the writ petition stands finally allowed and the impugned of Ext.P2 is here by set aside.
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