Case Law Details
Umashankar Alloys Private Limited Vs Assistant Commissioner of Central Tax (Madras High Court)
In the case of Umashankar Alloys Private Limited Vs. Assistant Commissioner of Central Tax, the Madras High Court addressed the issue of denied Input Tax Credit (ITC) for the assessment years 2017-2018 and 2018-2019. The petitioner challenged the impugned Order-in-Original No. 02/2022 dated February 1, 2022, which pertained to delayed claims for ITC contrary to Section 16(4) of the Goods and Services Tax (GST) enactments. The petitioner’s counsel highlighted recent legislative changes through Clause 114 of the Finance (No. 2) Bill, 2024, referencing the GST Council’s recommendations during its 53rd meeting. This change indicates Parliament’s intention to facilitate the availing of ITC rather than to restrict it.
The Court noted its previous consistent rulings, which had remitted similar matters back to the authorities for reconsideration in light of the amendments to Section 16 of the GST enactments. These amendments included the introduction of Sections 16(5) and 16(6) of the Central Goods and Services Tax (CGST) Act. The Court also cited a Supreme Court decision indicating that, once a tax is demanded, the benefit of ITC must be extended to the taxpayer. Consequently, the Madras High Court set aside the impugned order and directed the respondent to issue a fresh order on the matter, ensuring compliance with the revised provisions of the Tamil Nadu Goods and Services Tax Act, 2017. The Court mandated that this new order be issued within six months of receiving a copy of the order, ultimately allowing the petitioner a pathway to potentially reclaim the denied ITC. The writ petition was disposed of without costs, and the connected miscellaneous petition was closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
In this writ petition, the petitioner has challenged the impugned Order-in-Original No.02/2022 (DIN: 20220259XP000000C248) dated 01.02.2022.
2. The dispute pertains to the Assessment Years 2017-2018 and 20182019. The dispute primarily relates to the delayed availing of Input Tax Credit contrary to Section 16(4) of the respective GST enactments.
3. Learned counsel for the petitioner would place reliance on Clause 114 of the Finance (No.2) Bill, 2024, pursuant to the recommendation of the GST Council in its 53rd Meeting held on 22.06.2024. It is submitted that the intention of the Parliament is to allow the benefit of Input Tax Credit, not to deny it.
4. Already, this Court has taken a consistent stand that under similar circumstances, the matter be remitted back to the respondent to pass a fresh order in the light of the amendment to Section 16 of the respective GST enactments.
5. As a consequence of the above amendment, Sections 16(5) and 16(6) of the Central Goods and Services Tax (CGST) Act have been incorporated. Similar amendments are expected by the Tamil Nadu State Legislature to insert
6. Even otherwise, as per the decision of the Hon’ble Supreme Court in Formica India Division, Bombay, Burma Trading Corporation Limited Collector of Central Excise and others, 1995 Supp (3) SCC 552/1995 (77) ELT 511, once the tax is demanded, the benefit of Input Tax Credit has to be granted.
7. Under these circumstances, the Impugned Order can be set aside and the case be remitted back to the respondent to pass a fresh order.
8. Therefore, the Impugned Order is set aside and the case is remitted back to the respondent to pass fresh order on merits and in accordance with law within a period of six months from the date of receipt of a copy of this order after suitable amendments are made to the Tamil Nadu Goods and Services Tax Act, 2017.
9. This Writ Petitions stands disposed of with the above observations. No costs. Connected Writ Miscellaneous Petition is closed.
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