Case Law Details
Kochi Medicals Vs State Tax Officer (Kerala High court)
The Kerala High Court recently adjudicated a significant case involving Kochi Medicals and the State Tax Officer, centering on the Goods and Services Tax (GST) regime. This detailed article delves into the case’s intricacies, the arguments presented by both sides, the legal framework, and the Court’s decision to remit the matter back to the assessing authority.
Background: Kochi Medicals, a registered dealer under the CGST/SGST Act, 2017, found itself embroiled in a dispute over the claim of input tax credit (ITC) for the period from July 2017 to March 2018. The crux of the dispute was a mismatch between the GSTR – 3B filed by the petitioner and the GSTR – 2A, leading to the disallowance of ITC to the extent of the mismatch by the assessing authority.
Legal Arguments: The petitioner’s counsel highlighted the initial challenges faced by dealers in adapting to the GST system and argued for leniency based on Circular No. 183/15/2022-GST dated 27.12.2022. This circular provided relaxation for the financial years 2017-18 and 2018-19, specifically addressing issues of unreflected supplies in GSTR – 2A due to misreporting by suppliers.
Court’s Decision: The Kerala High Court, acknowledging the arguments and the provisions of the circular, set aside the previous orders that had dismissed the petitioner’s appeal. The matter was remanded back to the assessing authority to reconsider the petitioner’s case in light of the recent circular, with instructions to afford the petitioner a personal hearing for a fresh assessment.
Conclusion: The Kerala High Court’s decision in favor of Kochi Medicals underscores the judiciary’s recognition of the transitional challenges faced by businesses adapting to the GST framework. This verdict not only provides relief to Kochi Medicals but also sets a precedent for similar cases, emphasizing the importance of considering regulatory relaxations in assessing GST-related disputes. This case exemplifies the Court’s role in ensuring that the implementation of tax laws does not unduly penalize compliant businesses navigating the complexities of the GST regime.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
1. Heard Mr. Abraham K. J., learned Counsel for the petitioner and Ms. Reshmita Ramachandran, learned Government Pleader.
2. Petitioner is a registered dealer under the provisions of CGST/SGST Act, 2017. After the GST regime was rolled out w.e.f. 01.04.2017, the petitioner filed return for the period from July, 2017 to March, 2018 in GSTR – 3B. A notice in Form GST ASMT – 10 dated 08.07.2020 was issued to the petitioner in respect of his claim for input tax credit on supplies received by the him from the supplier/dealer. The ground for issuing the said notice was that there was a mismatch in the GSTR – 3B filed by the petitioner and GSTR – 2A in respect of the input tax credit claimed by him. The assessing authority on the ground of mismatch between GSTR – 3B filed by the petitioner and GSTR – 2A disallowed the input tax credit paid by the petitioner to the extent of mismatch. Aggrieved by the said order, the petitioner had filed an appeal. However, the same came to be dismissed by the impugned order in Exhibit P-6.
3. The learned Counsel for the petitioner submits that this was initial stage of implementation of the GST provisions and the dealers faced difficulties in understanding, uploading and correctly filing returns. The Central Board of Indirect Taxes and Customs considered these difficulties and issued Circular No. 183/15/2022-GST dated 27.12.2022 giving relaxation to the dealers in respect of the financial years 2017-18 and 2018-19. It is provided in the said Circular that where a supplier has filed Form GSTR – 1 as well as return in Form GSTR – 3B for a tax period, but had failed to report particular supply in Form GSTR – 1 and due to the said failure on the part of the supplier/dealer, the supply received by the recipient dealer did not get effected in Form GSTR – 2A, in such cases returns in ITC claimed by the registered person in the Form of GSTR – 3B and that available in Form GSTR – 2A is to be handled as per the procedure prescribed in para 4 of the said Circular. It is further provided that where a supply was made to a registered person and invoice was issued as per Rule 46 of CGST Rules containing GSTIN of the recipient, but supplier had wrongly reported the said supply as B2C supply, instead of B2B supply, in his Form GSTR – 1 due to which the said supply did not get reflected in Form GSTR – 2A of the said registered person, in such cases, the difference in ITC claimed by the registered person in his return in Form GSTR – 3B and that available in Form GSTR – 2A should be handled by following the procedure as provided in para 4 of the said Circular.
4. The learned Counsel for the petitioner submits that the petitioner would have filed the 2nd appeal before the Tribunal but, in absence of constitution of the said Tribunal, the petitioner has approached this Court. It is further submitted that this writ petition should be treated as the appeal and the matter may be remanded back to the assessing authority to consider the case of the petitioner in the light of the Circular No. 183/15/2022-GST dated 27.12.2022 as the petitioner’s case squarely falls within the parameters as detailed in the said Circular. Ms. Reshmita Ramachandran, learned Government Pleader does not dispute the fact that the petitioner’s case may come within the scope of the Circular No. 183/15/2022-GST dated 27.12.2022
5. Considering above facts and provision of the Circular mentioned above, the present writ petition is allowed. The impugned orders in Exhibits P-4 and P-6 are set aside and the matter is remitted back to the assessing authority to consider the case of the petitioner afresh in the light of the Circular No. 183/15/2022-GST dated 27.12.2022. The petitioner should be afforded an opportunity of personal hearing before finalising the fresh assessment on remand.
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