KLT Automotive and Tubular Products Limited VS Union Of India

The court heard arguments from Mr. Nankani, the senior counsel, along with Mr. Prithwiraj Choudhary, representing the petitioner, and Mr. Mishra, representing the respondents. Although the respondents vigorously contested the writ petition by submitting numerous affidavits and engaging in extensive hearings, recent developments have rendered a detailed judicial determination of the competing arguments unnecessary. This is because the petitioner’s main grievances have been largely addressed by administrative instructions issued by the Central Board of Indirect Taxes and Customs on September 18, 2020.

In this case, senior counsel Mr. Nankani and Mr. Prithwiraj Choudhary represented the petitioner, while Mr. Mishra represented the respondents. The writ petition, initially contested fervently by the respondents through numerous affidavits and extensive hearings, has been significantly addressed by administrative instructions issued by the Central Board of Indirect Taxes and Customs on September 18, 2020. Due to this development, a detailed adjudication of the conflicting contentions may no longer be necessary.

However, to provide a proper context, it is important to outline the main controversy and the reliefs sought by the petitioner. The petitioner is a limited company with its registered office in Andheri (East), Mumbai, involved in the manufacturing business.

In the case presented, senior counsel Mr. Nankani, along with Mr. Prithwiraj Choudhary, represented the petitioner, while Mr. Mishra represented the respondents. The writ petition was initially strongly contested by the respondents through numerous affidavits, and the matter was heard in detail. However, a subsequent development rendered a full adjudication of the contentious issues unnecessary. This development was the issuance of administrative instructions on September 18, 2020, by the Central Board of Indirect Taxes and Customs, which substantially addressed the petitioner’s grievance.

To provide context, the controversy and the reliefs sought by the petitioner are summarized as follows:

1. Petitioner’s Profile: The petitioner is a limited company with its registered office in Andheri (East), Mumbai. It operates in the automotive components manufacturing industry and is registered under both the Central Goods and Service Tax Act, 2017, and the Maharashtra Goods and Service Tax Act, 2017.

2. Grievance: The petitioner availed input tax credit (ITC) on taxes charged by suppliers and remitted GST on its output supplies after deducting the ITC. However, the petitioner admitted to delays in filing the monthly returns in forms GSTR-3B and GSTR-1. The specifics of these delays were detailed in paragraph 4.14 of the writ petition.

Due to the administrative instructions issued, which substantially resolved the petitioner’s concerns, the necessity for further legal adjudication was diminished. This resolution highlights the role of administrative actions in potentially alleviating disputes without prolonged litigation.

Heard Mr. Nankani, learned senior counsel along with Mr. Prithwiraj Choudhary, learned counsel for the petitioner, and Mr. Mishra, learned counsel for the respondents. Although the writ petition was extensively contested by the respondents, who filed several affidavits, and was heard in detail, subsequent developments have made a full adjudication of the rival contentions unnecessary. The petitioner’s grievance has been substantially addressed by administrative instructions dated 18.09.2020 issued by the Central Board of Indirect Taxes and Customs. Nevertheless, for a comprehensive understanding, it is appropriate to outline the controversy and the reliefs sought.

The petitioner is a limited company with its registered office in Andheri (East), Mumbai. It operates in the business of manufacturing automotive components and is registered under both the Central Goods and Service Tax Act, 2017, and the Maharashtra Goods and Service Tax Act, 2017. The petitioner has been availing input tax credit for taxes charged by its suppliers and remitting goods and service tax (GST) on its output supplies after deducting the input tax credit. However, the petitioner admitted that there were delays in filing the monthly returns in forms GSTR-3B and GSTR-1, as detailed in paragraph 4.14 of the writ petition.

When notified about the payment of interest on delayed tax payments for certain periods, the petitioner paid the interest calculated on net tax liability. However, respondent No.5 sent an email on 14.02.2020 imposing an interest of Rs. 5,06,06,060.00 for late payment of GST for the months from July 2017 to December 2019, calculated on the gross liability. Subsequently, by another email dated 25.02.2020, respondent No.5 revised the interest demand to Rs. 7,62,15,267.00 for late payment of GST from July 2017 to March 2020, again calculated on the gross liability.

The court heard arguments from Mr. Nankani, senior counsel for the petitioner, Mr. Prithwiraj Choudhary, learned counsel for the petitioner, and Mr. Mishra, counsel for the respondents. Although the writ petition was heavily contested with multiple affidavits and extensive hearings, recent administrative instructions dated 18.09.2020 from the Central Board of Indirect Taxes and Customs have substantially addressed the petitioner’s grievances, potentially negating the need for a detailed adjudication. Nevertheless, a brief overview of the dispute and the reliefs sought is provided for context.

The petitioner, a limited company based in Andheri (East), Mumbai, manufactures automotive components and is registered under the Central Goods and Service Tax Act, 2017, and the Maharashtra Goods and Service Tax Act, 2017. The company has been utilizing input tax credits for taxes charged by suppliers and paying GST on its output after deducting these credits. However, the petitioner admitted to delays in filing monthly returns in forms GSTR-3B and GSTR-1.

Upon being notified about interest due to delayed tax payments for specific periods, the petitioner paid interest based on the net tax liability. On 14.02.2020, Respondent No. 5 sent an email demanding Rs. 5,06,06,060.00 in interest for late GST payments from July 2017 to December 2019, calculated on the gross liability. This amount was later revised to Rs. 7,62,15,267.00 for late payments from July 2017 to March 2020, again based on gross liability.

Subsequent proceedings led to the issuance of garnishee notices to the petitioner’s customers on 16.07.2020 for interest recovery, despite the petitioner remitting the interest calculated on net GST liability up to January 2020 on 13.07.2020 and 14.07.2020. The petitioner alleges that the respondents issued these garnishee notices without following due process.

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