Case Law Details
Faizal Traders Pvt Ltd Vs Deputy Commissioner (Kerala High Court)
The Kerala High Court’s decision in the case of Faizal Traders Pvt Ltd vs Deputy Commissioner revolves around the denial of an input tax credit (ITC) claim and related penalties under the CGST/SGST Act. Faizal Traders, a registered dealer engaged in providing services to Southern Railway and distributing BSNL top-up and recharge coupons, contested an Order-in-Original that denied their ITC claim of Rs. 1,16,75,250 for the period from July to September 2017. The dispute primarily concerns procedural timelines and the applicability of certain notifications issued under the GST framework.
Background
Faizal Traders began filing GST returns from October 2017 and continued to do so in subsequent months. However, they failed to report inward and outward supplies for July to September 2017 in their GSTR-1 and GSTR-3B forms but later included these in their annual return (GSTR-9) for 2017-18. The tax authorities issued a notice in February 2023, highlighting the non-payment of GST on outward supplies during the specified period and demanded the corresponding tax, interest, and penalty. Faizal Traders responded by pointing out the claimed ITC in their annual return and paid the shortfall amount of Rs. 88,386 under both CGST and KGST.
Despite their response, a further show-cause notice was issued in March 2023, reiterating the demand of Rs. 1,16,75,250 along with interest and penalty. The company’s argument that the ITC claim was valid, though omitted initially, was rejected, leading to the passing of the contested Order-in-Original.
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