Tvl. Technocast Foundry Vs State Tax Officer (Madras High Court)
The Madras High Court disposed of the writ petitions challenging orders passed under Section 74 of the GST enactments for the assessment years 2018-19, 2019-20, and 2020-21, wherein demands of tax, interest, and penalty had been confirmed for alleged violation of Section 143 of the GST Acts read with Rule 45 of the GST Rules. The proceedings arose from an inspection conducted under Section 67, following which the authorities alleged that the petitioner had sent goods to its sister concern, Tvl. Unitech Couplers India Private Limited, on job work without maintaining the records required under Section 143 and Rule 45. It was alleged that the petitioner failed to establish that the goods sent for job work were returned within the prescribed period and that Form GST ITC-04 was not filed due to technical glitches. The petitioner also contended that the show cause notice did not disclose the ingredients necessary for invoking Section 74 and, therefore, the extended period of limitation could not be applied.
The Court examined the provisions of Section 143 and Rule 45 relating to job work procedures, including maintenance of records, issuance of challans, filing of Form GST ITC-04, and the consequence that inputs or capital goods not returned within the stipulated period are deemed to have been supplied by the principal, making the principal liable to pay tax and applicable interest. The Court observed that a principal cannot supply goods from a job worker’s premises unless the statutory conditions are fulfilled and noted that the exceptions provided under the proviso to Section 143(1) were not applicable to the petitioner. It further observed that under the GST scheme, the Department relies on records maintained by the taxpayer, and where goods are dispatched on a job work basis, proper accounts are required to be maintained and supplies should be made only from the registered premises after due accounting.
