Vinman Constructions Limited VS State of Jharkhand

The petitioner, a company involved in construction, registered under the GST Act in December 2017. During the period from December 2017 to March 2018, the company did not undertake any work, make sales, purchases, or receive payments. Despite this, the company obtained a project loan from Dewan Housing Finance Corporation Limited (DHFL) in December 2017. DHFL charged Rs. 16 crores as loan processing fees plus GST at 18%, totaling Rs. 2.88 crores. Two invoices were issued for these charges on December 30, 2017, and March 28, 2018.

The petitioner reported the inward supplies of services to the authorities under the Jharkhand Goods and Services Tax Act, 2017 (JGST Act, 2017), showing a taxable value of Rs. 16 crores and paid Rs. 2.88 crores in Input Tax Credit (ITC). Since the company did not engage in any business activities or financial transactions during this period, it did not file its GST return as it was unaware of the legal requirements within the prescribed deadline under Section 39 of the JGST Act, 2017.

On October 1, 2018, the petitioner received a Summary of Order under DRC-07 through its portal, indicating an assessment order dated September 28, 2018. This order, passed under Section 62 of the JGST Act, 2017, covered the period from July 2017 to March 2018. The assessment raised a total demand of Rs. 3,30,76,800, denying the ITC of Rs. 2.88 crores and imposing an equal amount as tax, along with interest and penalties.

The petitioner, a construction company, was registered under the GST Act in December 2017. During the period from December 2017 to March 2018, the company did not undertake any work. However, in December 2017, it secured a project loan from Dewan Housing Finance Corporation Limited (DHFL), which charged Rs. 16 crores as loan processing fees plus GST at 18%, totaling Rs. 2.88 crores. DHFL issued two invoices on 30.12.2017 and 28.03.2018. The petitioner reported these details in the inward supplies as required by the Jharkhand Goods and Services Tax Act, 2017 (JGST Act, 2017), and claimed to have paid the corresponding Input Tax Credit (ITC) of Rs. 2.88 crores. Since no business activities or transactions occurred during this period, the petitioner did not file its GST return for the period, citing ignorance of the law and the absence of any outward supply.

On 01.10.2018, the petitioner received a Summary of Order under DRC-07, which indicated that an assessment order had been passed on 28.09.2018 for the period July 2017 to March 2018, demanding a total of Rs. 3,30,76,800. The assessment order denied the ITC of Rs. 2.88 crores and imposed an equal amount as tax, along with interest and penalties. The petitioner noted that despite the summary mentioning an order dated 28.09.2018, no such order was visible on its electronic portal. The petitioner then applied for a certified copy of the order, filed its GSTR-01 and GSTR-3B for December 2017 on 17.10.2018, showing a nil return and claiming ITC. Returns for January, February, and March 2018 were also filed later, along with interest and late fees. The petitioner requested a revision of the order from the Commercial Tax Officer, claiming that no outward supplies had been made and thus no GST was payable.

Subsequently, the petitioner received a certified copy of the entire proceeding, revealing that the assessment order was actually dated 02.08.2018, not 28.09.2018 as previously indicated. The respondent authorities claimed that the order was mailed on 02.08.2018, but the petitioner never received it or any related notice.

Dissatisfied with the assessment, the petitioner appealed under section 107 of the JGST Act, 2017, paying Rs. 28,80,000 (10% of the disputed amount) as per the provisions. However, the Appellate Authority dismissed the appeal on 25.01.2020, noting that the petitioner had filed the GSTR-3B beyond the 30-day limit set by section 62(2) of the JGST Act, 2017. A demand notice for Rs. 3,30,76,800 was issued, and the ITC of Rs. 2.88 crores was blocked and adjusted against the disputed tax liability.

The petitioner, aggrieved by this decision, has now approached the court, seeking to overturn the appellate order dated 25.01.2020 issued by the Joint Commissioner of State Tax (Appeal), Ranchi Division.

The petitioner, a construction company registered under the GST Act in December 2017, asserts that it did not engage in any work or transactions from December 2017 to March 2018. During this period, the company took a project loan from Dewan Housing Finance Corporation Limited (DHFL), which included a loan processing fee of Rs. 16 crores with GST of Rs. 2.88 crores. Although the petitioner claimed this input tax credit (ITC) and filed returns accordingly, it did not file its GST returns on time for the period due to a misunderstanding of the legal requirements.

In October 2018, the petitioner received a Summary of Order (DRC-07) indicating an assessment order dated September 28, 2018, which raised a demand of Rs. 3,30,76,800, including denying the ITC of Rs. 2.88 crores and imposing additional penalties and interest. Despite the summary mentioning this order, the petitioner stated that the actual order was not visible on its portal and had not been served to them directly. After eventually receiving the certified copy of the entire order, the petitioner learned that the assessment order was actually dated August 2, 2018.

The petitioner appealed against this assessment under Section 107 of the JGST Act, 2017, paying 10% of the disputed amount as required. However, the appeal was dismissed on January 25, 2020, on the grounds that the GSTR-3B returns were filed beyond the prescribed period. Consequently, the ITC of Rs. 2.88 crores was blocked and adjusted against the disputed tax liability.

The petitioner has now approached the court seeking to overturn the appellate order and the assessment order, and to reclaim the blocked ITC. The primary arguments include the claim that no notice under Section 46 of the JGST Act was served before the assessment order was made, which is a mandatory procedural requirement, and that the assessment order was not properly communicated to the petitioner. They argue that the assessment order should have been withdrawn as they filed the returns within thirty days of receiving the summary order.

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