ARS Steels And Alloy International Pvt Ltd VS The State Tax Officer, Group – I, Chennai

This series of Writ Petitions delves into the assessment orders issued to two separate taxpayers under the Goods and Services Tax Act, 2017 (GST Act) for the fiscal periods spanning 2017-18, 2018-19, and 2019-20. The court consolidates these cases due to the shared legal issue they present.

Within W.P. No. 3936 of 2020, counsel Mr. Joseph Prabakar contends that an additional concern revolves around stock reconciliation. Notably, the authorities had requested specific documents, such as the vehicle movement register aligning with issued vehicle gate passes, which were not provided during the assessment. While the petitioner’s counsel asserts that these details have since been furnished to the court, the respondent’s counsel argues that this matter is factual and suggests the petitioner pursue resolution through statutory appeal at the appellate authority level.

The summary pertains to a series of Writ Petitions concerning assessment orders issued under the Goods and Services Tax Act, 2017 for the periods 2017-18, 2018-19, and 2019-20, involving two separate assessees. The court’s decision encompasses multiple issues raised in these petitions, although they share a common legal concern.

In one of the petitions, W.P.No.3936 of 2020, the petitioner’s counsel argues an additional issue regarding stock reconciliation, specifically regarding the production of vehicle movement registers requested by authorities but not presented during assessment. While the petitioner now provides these details to the court, it’s deemed a factual matter best addressed by the appellate authority through a statutory appeal. The petitioner is given four weeks to file such an appeal.

Regarding W.P.Nos.2885, 2888, and 2890 of 2020, the petitioner’s counsel notes that statutory appeals have been filed for other issues apart from the legal matter raised in these petitions.

The court’s decision primarily revolves around a legal issue concerning the reversal of Input Tax Credit (ITC) concerning losses incurred during the manufacturing process. The petitioners are involved in manufacturing MS Billets and Ingots, where MS scrap serves as input. A portion of inputs is inevitably lost during manufacturing. The disputed orders seek to reverse a fraction of the ITC claimed by the petitioners corresponding to the input loss, citing Section 17(5)(h) of the GST Act.

The batch of Writ Petitions under consideration involves two sets of assessment orders made under the Goods and Services Tax Act, 2017 (GST Act) for the periods spanning 2017-18, 2018-19, and 2019-20, pertaining to two taxpayers. Despite being separate cases, they are addressed together due to the shared legal issue at hand.

In W.P.No.3936 of 2020, the petitioner’s counsel argues an additional issue concerning stock reconciliation, particularly regarding the absence of vehicle movement records during assessment. While the petitioner claims to have submitted evidence supporting their position, it’s suggested that this matter should be addressed by the departmental authorities initially, with the petitioner given the opportunity to file a statutory appeal within four weeks.

For W.P.Nos.2885, 2888, and 2890 of 2020, the petitioner’s counsel indicates that statutory appeals have been filed concerning other issues, apart from the legal matter raised in the writ petitions.

The main focus of this order, however, is on the legal issue revolving around the reversal of Input Tax Credit (ITC) concerning losses incurred during the manufacturing process. The petitioners, engaged in manufacturing MS Billets and Ingots, encounter a loss of input material inherent in the manufacturing process. The contested orders seek to reverse a portion of the ITC claimed by the petitioners, proportionate to this loss, citing Section 17(5)(h) of the GST Act.

To provide context, reference is made to the erstwhile Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act), which contained a similar provision in Section 19 regarding ITC eligibility and denial in various scenarios.

The pertinent sections of the TNVAT Act are cited, emphasizing the eligibility for ITC based on tax payments made under the Act, along with provisions for denial of ITC under specific circumstances, such as goods not sold due to theft, loss, or destruction, leading to a reversal of tax credit if already availed.

This summary highlights the legal intricacies surrounding the reversal of Input Tax Credit in relation to manufacturing losses and underscores the need for statutory appeals and further administrative proceedings to address factual disputes within the cases.

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