Case Law Details
State of Uttar Pradesh & Anr Vs Vivo Mobile India Private Ltd & Ors (Supreme Court of India)
Introduction: In a significant ruling, the Supreme Court of India dismissed a Special Leave Petition filed by the State of Uttar Pradesh against the Allahabad High Court’s order quashing a GST demand of Rs. 235.52 Crores imposed on Vivo Mobile India Private Limited. The case centered on an Input Tax Credit dispute and the interpretation of the Goods and Service Tax Act, 2017.
Background of the Case: The GST Authorities raised a demand of Rs. 235.52 Crores against Vivo Mobile India Private Limited under Section 74(9) of the GST Act. The dispute arose from the cumulative computation of Input Tax Credit by Vivo Mobile for the months of February 2020 to August 2020.
GST Authorities’ Allegations and Legal Basis: The GST Authorities claimed that Vivo Mobile had claimed excess Input Tax Credit of Rs. 110 Crores, relying on Circular No. 113 dated 11.11.2019. The Circular suggested that cumulative adjustments could only be made until the date of filing of GSTR-1 declaration by suppliers.
Allahabad High Court’s Decision: The High Court held that Input Tax Credit is a substantive right under Section 16 of the GST Act, and the circular cannot override statutory provisions. It interpreted the proviso to Rule 36(4) of the GST Rules, creating a deeming fiction during the COVID-19 period, allowing a longer reconciliation period.
Relief Granted by High Court: The High Court directed the respondents to return the entire excess recovery amount of Rs. 11 Crores to Vivo Mobile with 6% interest. The judgment emphasized the legislative intent to facilitate taxpayers and revenue during the COVID-19 period.
Supreme Court’s Observations: The Supreme Court, comprising Justice B.V. Nagarathna and Justice Augustine George Masih, refused to interfere, considering the unique circumstances of the case. The court noted the respondents’ request for an extension of the scheme only by one month, i.e., September 2020.
Verification of Excess Recovery: While the Additional Solicitor General claimed no excess recovery by the Department, the Supreme Court directed verification. If excess recovery is found, the High Court’s direction on interest at 6% will prevail.
Conclusion: The Supreme Court’s dismissal of the Special Leave Petition upholds the Allahabad High Court’s decision in favor of Vivo Mobile. The ruling emphasizes the importance of statutory provisions over circulars and recognizes the legislative intent behind GST rules during the challenging times of the COVID-19 pandemic. The case sets a precedent for the protection of substantive rights of taxpayers under the GST Act.
Read Relevant High Court Judgment: GST Circular Doesn’t Override Statutes: HC Quashes Rs. 235 Crore Demand on Vivo Mobile
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
We have heard learned A.S.G. appearing for the petitioners and perused the material on record.
Having regard to the peculiar facts of this case, we are not inclined to interfere in the matter.
The reason why we are saying so is that although the scheme was between March, 2020 to August, 2020, in the instant case, the respondents had sought benefit or extension of the scheme only by one month, that is, September, 2020.
Further in paragraph ‘89’ the High Court has recorded that the respondent(s) herein would be entitled to interest at the rate of 6% per annum on the amount of excess recovery of Rs.11,00,69,010/- (Rupees Eleven Crores, Sixty Nine Thousand and ten only) from the date of the excess recovery to the date of its actual refund.
It is pointed out by learned A.S.G. that there is no excess recovery made by the Department. However, the same is subject to verification and in the event, there is any excess recovery, the direction of the High Court shall prevail.
The special leave petition is, hence, dismissed.
Pending application(s), if any, shall stand disposed of.
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