Case Law Details
NL Tile Art Pvt Ltd. Vs Commissioner of Commercial Taxes (Karnataka High Court)
The Karnataka High Court has set aside and remanded a Goods and Services Tax (GST) case involving NL Tile Art Pvt. Ltd. for fresh assessment. The petitioner had challenged an adjudication order issued by the Assistant Commissioner of Commercial Taxes, which concluded that the company had claimed excess Input Tax Credit (ITC) for the tax periods from April 2019 to March 2020. The High Court’s decision was based on the petitioner’s argument that the tax authorities had based their assessment solely on GSTR-2A and GSTR-3B filings without taking into account crucial documents like the company’s annual returns and Form GST DRC-03, which is used for the voluntary reversal of ITC.
The petitioner contended that while an initial excess claim was made in the financial year 2018-19, a portion of it was subsequently reversed through a DRC-03 filing in 2019-20. The company also claimed that ITC for 2019-20 was not claimed in that year but was instead carried forward and claimed in the subsequent financial year, 2020-21. The High Court found merit in these submissions, noting that the documents provided by the petitioner seemed to substantiate their claim that no excess ITC was ultimately claimed. The court concluded that the tax authorities’ failure to consider all relevant documents and their resulting incorrect calculation rendered the orders unsustainable.
As a result, the court quashed the adjudication order and the subsequent appeal order, remitting the matter to the Assistant Commissioner for reconsideration. The petitioner has been directed to appear before the tax authority on August 21, 2025, to submit a detailed reply to the show-cause notice, and the authority must then dispose of the case by considering all the documents presented. This ruling highlights the importance of tax authorities conducting a comprehensive review of all relevant filings and documents before making a final assessment.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
1. The petitioner is before this Court seeking for the following reliefs:
i. Issue a writ of certiorari or a declaration in the nature of writ of certiorari quashing the Adjudication Order dated 19-07-2024 passed by the Assistant Commissioner of Commercial Taxes, LGSTO-016, Bengaluru, the second respondent herein, in No. ACCT/LGSTO-16/DRC-07/2024-25, under sections 73(10), 73(9), 50 & 122 of the KGST Act, 2017 and CGST Act, 2017 for the tax periods April 2019 to March 2020, in the case of the petitioner – ANNEXURE – C
ii. issue a writ of certiorari or a declaration in the nature of writ of certiorari quashing the summary of Order under section 73(9) in Form GST DRC-07 dated 20-07-2024 passed by the Assistant Commissioner of Commercial Taxes, LGSTO-016, Bengaluru, the second respondent herein, in No. ZD290724066834U under sections 73(10), 73(9), 50 & 122 of the KGST Act, 2017 and CGST Act, 2017 for the tax periods April 2019 to March 2020, in the case of the petitioner – ANNEXURE – C;
iii. issue a writ of certiorari or a declaration in the nature of writ of certiorari quashing the Order dated 21-02-2025 passed by the Joint Commissioner of Commercial Taxes, (Appeals)-4, Bengaluru, the third respondent herein, in No. AD2901250403286 and ZD2902250848811, under section 107 of the KGST Act, 2017 and CGST Act, 2017 for the tax periods April 2019 to March 2020, in the case of the petitioner – ANNEXURE – D;
iv. and grant such other relief or reliefs as this Hon’ble Court may deem fit in the circumstances of the case, in the interest of justice.
2. The grievance of the petitioner is that without looking at the annual returns which have been filed for the year 2018-19 and 2019-20, the impugned order has been passed by only considering GSTR-2A and GSTR-3B.
3. The submission of Sri. Thirumalesh, learned counsel for the petitioner is that the ITC was claimed in the Financial year 2018-19 to an extent of Rs.9,97,050/- and Rs.46,750/- which had been reversed by filing DRC-03 in the year 2019-20 insofar as Rs.4,69,447/- is concerned and the ITC claimed in the Financial Year 2019-20 not having been claimed, the same was claimed in Financial Year 2020-21. He submits that if all these factors are taken into consideration, it would be seen that there is no excess ITC which has been claimed by the petitioner. The respondents have only taken into consideration GSTR-2A and GSTR-3B without taking into consideration DRC-03 and annual returns, has arrived at a wrong conclusion and wrong calculation.
4. All the above submissions of learned counsel for the petitioner are substantiated by the documents which have been produced, it was but required for the respondents to have considered the annual returns, tabulated the ITC claims over the various years, as also reversal of the ITC which have been made by filing DRC-03. This not having been done has resulted in the respondents passing an order on the ground that the petitioner has claimed excess ITC when the petitioner apparently has not.
5. These matters requiring factual re-appreciation, I am of the considered opinion that the impugned orders not being sustainable, the matter would require to be remitted to respondent No.2 for fresh consideration. As such, I pass the following:
ORDER
i. The writ petition is allowed.
ii. The adjudication order dated 19.07.2024 passed in No.ACCT/LGSTO-16/DRC-07/2024-25 and order dated 20.07.2024 in No.ZD290724066834U at Annexure-C and consequently, order dated 21.02.2025 passed in No.AD2901250403286 and ZD2902250848811 at Annexure-D are set-aside.
iii. The matter is remitted for reconsideration at the stage of reply to the show cause notice.
iv. Since, the present order is passed in the presence of both the counsels, the petitioner shall appear before respondent No.2 without requirement of any further notice on 21.8.2025 and submits his reply to the show-cause notice.
v. The said reply shall be considered and disposed in accordance with directions issued in the case of M/s Karnataka Chinmaya Seva Trust -v- Joint Commissioner of Central Tax [W.P. No.11154/2023 dated 3.07.2024]
Author Bio
