M. Trans Corporation vs State Tax Officer

The petitioner is a registered dealer under the provisions of the Central Goods and Services Tax (CGST) Act and the Kerala State Goods and Services Tax (SGST) Act, 2017, along with the Rules formulated under these statutes. For the financial year 2017-18, the petitioner duly filed returns as mandated by the GST Act. However, a show cause notice was served to the petitioner in Form GST ASMT 10 on 02.08.2020. This was followed by another show cause notice issued on 10.11.2022. In response to these notices, the petitioner submitted a detailed reply. Despite this, the Assessing Authority did not accept the petitioner’s arguments and concluded that the petitioner had availed excess input tax credit (ITC) for the financial year 2017-18, amounting to Rs. 47,048/- each as SGST and CGST. As a result, the petitioner has been directed to pay the respective tax, along with the accrued interest and penalties.

The learned Counsel for the petitioner has submitted that the petitioner, instead of correctly claiming the Central GST (CGST) and State GST (SGST), inadvertently claimed the Integrated GST (IGST). This, the counsel argues, was a bonafide mistake on the part of the petitioner and not an intentional act of tax evasion or misrepresentation. Given the nature of this mistake, the learned Counsel contends that the disallowance of the input tax credit claimed by the petitioner is unjust and disproportionate. To bolster this argument, the learned Counsel referenced the judgment of the Karnataka High Court in the case of M/s. Orient Traders v. The Deputy Commissioner of Commercial Taxes & Another [2023 (1) TMI 838 – Karnataka HC]. In this judgment, it was held that for bonafide mistakes, a dealer or assessee should not be unduly punished, and the ITC wrongly availed as IGST instead of CGST should be allowed. The Counsel for the petitioner posits that this precedent should be applied to the petitioner’s case, thus allowing the mistakenly claimed ITC as IGST to be reclassified appropriately rather than being entirely disallowed. This argument is based on the principle that honest mistakes, especially in the early years of GST implementation, should be viewed with leniency to ensure fair treatment of taxpayers who are navigating the complexities of the new tax regime.

I have considered the submissions advanced by the learned Counsel for the petitioner and the learned Government Pleader. Section 54, read in conjunction with Section 49, lays down the procedure for the refund of excess tax or any amount paid by the registered dealer, stipulating that the dealer must submit an application within two years from the last date of filing the returns for the relevant financial year. In the present case, the financial year in question is 2017-18, for which the due date for filing an application to correct the mistake or claim a refund of the IGST was 23.04.2019. Admittedly, the petitioner did not move any application within the prescribed time limit, nor did they do so during the extended period. This Court, in exercising its limited jurisdiction, cannot amend the statute to prescribe a different time limit for such applications. Consequently, I do not find much substance in this writ petition.

Regarding the Judgment of the Karnataka High Court that the learned Counsel for the petitioner has relied upon, it is pertinent to note that the statutory provisions were not considered in that Judgment. Therefore, the Judgment does not hold any binding precedent. In view of these observations, the present writ petition is hereby dismissed. The petitioner’s failure to adhere to the statutory timelines as stipulated under Sections 54 and 49 cannot be overlooked, and this Court is bound by the legislative framework. While the petitioner’s counsel presented arguments based on a bonafide mistake, the statutory requirements for claiming a refund or rectifying errors are clear and unambiguous. The legislative intent behind these provisions is to ensure that tax compliance is timely and procedural accuracy is maintained.

The two-year period prescribed for filing such applications is not a mere formality but a substantive requirement that serves the purpose of ensuring legal certainty and administrative efficiency. Allowing deviations from this statutory period would lead to uncertainty and potentially open the floodgates to numerous claims long after the relevant period has lapsed, thereby disrupting the smooth functioning of tax administration. The provisions of Sections 54 and 49 are designed to bring about finality in tax matters within a reasonable timeframe, which is crucial for both the taxpayer and the revenue authorities.

The Court must uphold these statutory deadlines to maintain the integrity of the tax system and ensure that the law is applied uniformly. It is beyond the jurisdiction of this Court to extend or modify the statutory timelines prescribed by the legislature. Any such intervention would amount to judicial overreach and undermine the principle of separation of powers.

Moreover, the reliance on the Karnataka High Court judgment is misplaced as it does not account for the statutory provisions that govern the matter at hand. The binding nature of precedents is contingent upon their alignment with statutory mandates, and in this case, the absence of consideration of the relevant statutory provisions renders the judgment non-binding. Consequently, the argument that the petitioner should be granted relief based on this precedent is untenable.

In conclusion, the petitioner’s writ petition is dismissed due to non-compliance with the statutory provisions of Sections 54 and 49 of the CGST Act and Kerala SGST Act, 2017. The legislative framework must be adhered to strictly, and deviations cannot be entertained by this Court. The statutory timelines for filing applications for correction or refund are essential to ensure procedural discipline and fairness in the tax administration process. Therefore, this Court finds no merit in the petitioner’s case and dismisses the writ petition accordingly.

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M. Trans Corporation             

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