Case Law Details
Vishwanath Iron Store Vs Union of India (Patna High Court)
Introduction: A recent case at the Patna High Court revolves around an issue related to input tax credit (ITC) and the interpretation of Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), and Integrated Goods and Services Tax (IGST) in a specific transaction. The petitioner, Vishwanath Iron Store, sought a correction of an invoice to avail ITC. This article delves into the details of the case and the court’s findings.
Detailed Analysis:
1. Background of the Case: Vishwanath Iron Store, a partnership firm based in Sasaram, Bihar, operates under the goods and services tax (GST) regime and is primarily involved in buying and selling scrap materials. The firm is registered under the Bihar State Goods and Services Tax Act, 2017. Vishwanath Iron Store participated in an e-auction conducted by the East Central Railways to sell scrap and other materials. Following a successful bid, the firm received materials valued at Rs. 17 lakhs based on an invoice (Annexure-2). This invoice levied CGST and SGST at 9% each.
2. Claim for Input Tax Credit: Vishwanath Iron Store later realized that, as the goods were moved out of the state, the correct tax to be levied should have been IGST rather than CGST and SGST. As a result, the firm’s request for ITC was denied.
3. Legal Argument and Request for a Revised Invoice: The petitioner argued that they were not initially aware of the tax requirements, and the correction was only brought to their attention after consulting a tax consultant. They emphasized that, as per various notifications issued by the Railways, the invoice should have been issued under IGST due to a mistake. Therefore, the tax collected should be deemed as IGST, not CGST and SGST. The petitioner sought a writ of mandamus to compel the Railways to issue a revised invoice for the purpose of claiming ITC.
4. Court’s Analysis: The court considered the circumstances of the case. It noted that the goods were delivered in Jharkhand, and the sale was treated as a local sale, as evident from the delivery/sale release order. The petitioner received the goods in Jharkhand. If the petitioner intended to move the materials outside the state, the sale should have been designated as an inter-state transaction. While the auction was conducted in Samastipur, the sale was to be executed from Jharkhand. For a sale to be classified as inter-state, it should involve the movement of goods out of the state.
5. Absence of Proof for Goods Movement: The court observed that the petitioner was a registered dealer under the Bihar GST Act, and the sale was made from the state of Jharkhand. However, there was no concrete evidence to establish that the goods had indeed moved outside the state of Jharkhand. The court also highlighted that the mere assertion of the Railways that the invoice should be considered issued under the IGST Act did not automatically entitle the petitioner to claim ITC. The understanding between the parties to the transaction could not override the provisions of tax laws. Furthermore, any claim for ITC should be reflected in the ledger account maintained by the taxpayer with the tax department.
6. Timing of the Legal Action: The court took note that the invoice in question was issued during the 2017-18 assessment year. The petitioner filed the writ petition in 2021, well beyond the time frame for claiming ITC. The enabling provision for claiming ITC in such cases was not available at this point. According to Section 16(4) of the Bihar GST Act, ITC must be claimed within specific timeframes.
Conclusion: The Patna High Court’s judgment in the case of Vishwanath Iron Store vs. Union of India reiterates the significance of proper tax classification for transactions. Understanding between parties cannot supersede the provisions of taxation laws. In this particular case, the petitioner’s request for a revised invoice for the purpose of availing input tax credit was denied, primarily due to the absence of evidence for the movement of goods and the timing of the legal action. This judgment serves as a reminder of the importance of adherence to GST regulations and timelines for claiming ITC.
FULL TEXT OF THE JUDGMENT/ORDER OF PATNA HIGH COURT
The petitioner, who is an assessee under the goods and services tax regime, seeks for correction of an invoice for the purpose of availing input tax credit.
2. The petitioner is a partnership firm having its place of business at Sasaram within the State of Bihar. The partnership firm is engaged in the business of sale and purchase of scrap materials and is registered under the Bihar State Goods and Services Tax Act, 2017. The petitioner applied pursuant to a tender issued by the East Central Railways, for sale of scrap and other such materials by way of an e-auction. The petitioner turned out successful and on the basis of a sale invoice, produced at Annexure-2, the materials auctioned having a total worth of Rs. 17 lakhs, was taken possession of by the petitioner. The invoice at Annexure-2 levied CGST and SGST at 9% each. The petitioner on the basis of the invoice paid the amounts and obtained possession of the materials.
3. It is the submission of the petitioner that the partners of the petitioner were not aware of the requirements and only later, when the tax consultant was apprised of the delivery/sale invoice, it was pointed out that since the goods were taken possession of in Jharkhand and moved to outside the State, what was to be levied was IGST and not CGST and SGST. In the above circumstances, the petitioner is denied the input tax credit, is the claim raised.
4. The petitioner also points out to the various notifications issued by the Railways, which speak of the invoice having been issued only by reason of a mistake and the tax collected having been deemed to be collected as IGST and not as CGST and SGST. The learned counsel for the petitioner seeks a writ of mandamus to the authorities of the Railways for issuing of a fresh invoice; for the purpose of availing input tax credit.
5. Admittedly, the goods were delivered at Jharkhand and the sale is shown to be a local sale, as evidenced from delivery/sale release order itself. The petitioner received the goods at Jharkhand. If the petitioner had intended to move the material out of the State, the petitioner should have specified it and also insisted that the sale be treated as an Inter-State one. The auction though conducted in Samastipur, the sale was to be effected from Jharkhand and unless the sale occasions the movement of goods outside the State, it cannot be termed as an Inter-State sale.
6. In the present case, the petitioner is a dealer registered under the BGST Act and the sale was effected from the State of Jharkhand. However, there is absolutely nothing to prove the movement of goods to the State of Bihar. The mere statement of the Railways that the invoice issued should be deemed to have been issued under the IGST Act, cannot enable the petitioner to seek input tax credit. The transaction between the Railways and the petitioner would not regulate the tax liability and in any event, the tax levied and collected as CGST and SGST would have been credited to the respective head of account. There can be no understanding between the parties to the transaction that what has been paid as SGST and CGST is to be deemed to be paid as IGST without due compliance of th provisions of the taxation enactment. Such understanding cannot also regulate an input tax credit without such credit being shown in the ledger account maintained by the assessee with the Department.
7. In this context, we have to reiterate that even in the writ petition there is nothing produced to prove that the goods had, in fact, moved outside the State of Jharkhand.
8. We also have to notice that the invoice is one issued in assessment year 2017-18. The petitioner has filed the above writ petition in the year 2021 when the enabling provision for claiming input tax credit would not have been available in any event. Section 16(4) of the BGST Act, enables the input tax credit to be taken in respect of any invoice or debit note, in the case of a supplier, goods or services or both, after the due date of furnishing of the return under Section 39, in the month of September following the end of financial year to which such invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier. The present invoice is dated 23.10.2017 and hence, the input tax credit has to be claimed before 28.11.2017 or furnishing of the annual return for the assessment year 2017-18, whichever is earlier. There is absolutely no possibility of the input tax credit being availed of at this point.
9. We find absolutely no reason to direct the Railways to issue a revised invoice nor can the same be permitted.
10. Writ petition stands dismissed.
11. Interlocutory application, if any, shall stand disposed of.
