Subhash Singh Choudhary through its proprietor Vs State of Jharkhand through the Secretary-cum-Commissioner (Jharkhand High Court)
Jharkhand High Court held that unadjusted TDS amount under Jharkhand Value Added Tax Act is allowed to be migrated under Jharkhand Goods and Services Tax Act, 2017.
Facts- Post implementation of GST, Petitioner claimed transition of the amount of credit of value added tax of Rs. 1,73,69,826/- by filing GST TRAN-1 online in GSTN Portal on 28th September, 2017. However, a Summary of Show Cause Notice in Form GST-DRC-1 was issued by Respondent No. 5-State Tax Officer, Bokaro, alleging, inter alia, that the Petitioner was not entitled for migration of the amount of credit of value added tax of an amount of Rs. 1,73,69,826/- and, accordingly, Petitioner was directed to show cause as to why entire claim of migration be not disallowed and interest and penalty be not imposed upon Petitioner for wrongful availment of ITC.
Petitioner submitted its reply contending that Petitioner did not violate Section 140 of the JGST Act, but, Petitioner was communicated vide e-mail a Summary of Order in Form GST DRC-07 dated 19.01.2019, wherein the entire amount migrated by the Petitioner of Rs. 1,73,69,826/-was disallowed and interest and penalty was also imposed upon Petitioner.
The Petitioner being aggrieved by the rejection of its claim of migration of credit of value added tax, preferred Appeal before the First Appellate Authority – Joint Commissioner of State Tax, Dhanbad Division, Dhanbad vide Appeal dated 04.03.2019 which was registered as Appeal Case No. BK/GST-03/2019-20. However, after Petitioner preferred the said Appeal, Rectification Order was passed by Respondent No. 5 in Form GST DRC-08, wherein earlier denial of migration of entire ITC of Rs. 1,73,69,826/- was reduced to denial of ITC only to a sum of Rs. 43,07,310/-i.e. an amount equivalent to excess TDS reflected in the quarterly return of the Petitioner.
It is the specific case of the Petitioner that the Appellate Authority merely on alleged technicalities rejected the second appeal of the Petitioner. Further, it was the specific case of the Petitioner that neither the original adjudication order nor the rectification order was ever communicated to the Petitioner and only the summary of order was communicated in Form GST DRC-07 and Form GST DRC-08 and, under the said circumstances, rejection of the appeal of the Petitioner on the ground that it has not enclosed along with Memo of Appeal the adjudication order and/or rectification order was not tenable in the eye of law.
Conclusion- Proviso to Section 140(1) of the JGST Act provides that a registered person shall not be allowed to tax credit where the said amount of credit is not admissible as input take credit under the GST Act. It was contended by the Respondents that since TDS was in the nature of output tax, it was not admissible as input tax credit under the GST Act and, hence, cannot be allowed to be migrated. In our opinion, the aforesaid restrictive interpretation sought to be given to the proviso is beyond the scheme of transitional provision.
Thus, we are of the opinion that proviso Clause (i) to Section 140(1) of the JGST Act only restricts migration of such amount of credit where there is an express prohibition in respect of such transaction of claiming input tax credit under Section 17(5) of the GST Act.
FULL TEXT OF THE JUDGMENT/ORDER OF JHARKHAND HIGH COURT
