Pinstar Automotive India Pvt. Ltd VS Additional Commissioner Office Of The Commissioner Of GST And Central Excise

Mr. Ramesh Kutty, a seasoned Senior Panel Counsel, has accepted notice on behalf of the respondent and is prepared with instructions to help the court resolve the matter conclusively, even at the initial stage.

The petitioner is a taxpayer under the Central Goods and Services Tax Act, 2017 (referred to as the ‘Act’), for the assessment period spanning from July 2017 to March 2019. They received a pre-assessment notice on September 17, 2021, regarding the invocation of Section 16(2)(c) of the Act.

According to the respondent:

1. The petitioner received supplies from third parties, claiming to have paid the entire amount, including taxes, to these suppliers.

2. However, the respondent contends that these suppliers have defaulted as their registrations were canceled, and the tax paid by the petitioner has not been forwarded to the tax department by these suppliers.

Section 16 of the Act deals with the eligibility and conditions for claiming Input Tax Credit (ITC). Sub-section (2) of Section 16 outlines certain mandatory conditions for availing ITC.

Mr. Ramesh Kutty, a seasoned Senior Panel Counsel, has accepted notice on behalf of the respondent and is prepared to provide instructions to the court for the final disposition of the matter, even at the stage of admission. The case involves a petitioner who is an assessee under the Central Goods and Services Tax Act, 2017, for the period of assessment from July 2017 to March 2019. The petitioner received a pre-assessment notice on 17th September 2021 regarding the invocation of Section 16(2)(c) of the Act.

The respondent contends that certain supplies were made to the petitioner by third parties, and while the petitioner claims to have paid the entire amount including tax to these suppliers, the suppliers have had their registrations cancelled and have not remitted the tax to the Department. Section 16 of the Act outlines the eligibility and conditions for taking Input Tax Credit (ITC), including the condition that tax charged in respect of the supply must have been actually paid to the government.

The petitioner is mandated to ensure compliance with the provisions of Section 16(2)(c) to be entitled to ITC. The Department is not at fault, as three suppliers failed to remit tax despite uploading their invoices, resulting in the reversal of ITC for the petitioner.

On the other hand, the petitioner claims to have fulfilled all statutory conditions and provided proof of payment within 180 days, asserting eligibility for ITC. However, the respondent rejected this claim and issued an order-in-original on 27th July 2022, confirming the demand proposed in the show cause notice.

Mr. Ramesh Kutty, a learned Senior Panel Counsel, has accepted notice for the respondent and is prepared to assist the court in resolving the matter definitively, even at the initial stage. The petitioner is a taxpayer under the Central Goods and Services Tax Act, 2017 (referred to as ‘Act’) for the assessment period from July 2017 to March 2019. They received a pre-assessment notice on 17th September 2021 regarding the invocation of Section 16(2)(c) of the Act.

According to the respondent’s case:

(i) The petitioner received supplies from third parties, claiming to have paid the entire amount, including tax, to the suppliers.

(ii) The suppliers’ registrations were cancelled, and they failed to remit the tax to the Department.

Section 16 of the Act governs the eligibility and conditions for Input Tax Credit (ITC). Sub-section (2) of Section 16 outlines mandatory conditions for the continuity of ITC, including that the tax charged for the supply must have been paid to the Government. Therefore, compliance with these provisions is crucial for the petitioner to claim ITC.

The Department was not at fault as three suppliers did not remit the tax despite uploading invoices in GSTR-1, resulting in the petitioner’s loss of ITC.

The petitioner contended that they fulfilled all statutory conditions and provided evidence of payment within 180 days, thus claiming eligibility for ITC. However, this argument was rejected by the respondent, who issued an order-in-original on 27th July 2022 confirming the demand proposed in the show cause notice.

The petitioner sought rectification of errors under Section 161 of the Act, arguing that certain decisions were not considered by the respondent. These decisions were:

1. Arise India Limited v. Commissioner of Trade and Taxes (Delhi High Court)

2. Shri Ranganathar Valves Private Limited v. Assistant Commissioner (Madras High Court)

3. CC & CCE v. M/s. Juhi Alloys Limited (CESTAT, Delhi)

4. Commissioner of Central Excise, Jalandhar v. M/s. Kay Kay Industries (Supreme Court)

There is no dispute that Section 16 provisions must be strictly observed to safeguard revenue interests, with the Act incorporating lessons from previous tax regimes.

Mr. Ramesh Kutty, representing the respondent, is equipped to address these legal complexities and assist the court in reaching a final resolution.

Mr. Ramesh Kutty, a seasoned Senior Panel Counsel, has appeared before the court representing the respondent in a case concerning the Central Goods and Services Tax Act, 2017 (referred to as ‘the Act’). The petitioner, an assessee under the respondent’s jurisdiction for the period from July 2017 to March 2019, received a pre-assessment notice on 17th September 2021 regarding the invocation of Section 16(2)(c) of the Act.

The respondent’s contention revolves around certain supplies made to the petitioner by third parties. While the petitioner claims to have paid the entire amount, including taxes, to these suppliers, the suppliers allegedly failed to remit the taxes to the Department as their registrations were canceled. Section 16 of the Act lays down conditions for claiming Input Tax Credit (ITC), one of which mandates that the tax charged on supplies must be paid to the government.

The Department contends that the petitioner must ensure compliance with these conditions to be eligible for ITC. They argue that the Department cannot be faulted for the reversal of ITC, IGST, CGST, and SGST, as three suppliers failed to remit taxes.

In response, the petitioner asserts that they fulfilled all statutory conditions and provided evidence of payment within 180 days, making them eligible for ITC. However, the respondent rejected this claim and confirmed the demand proposed in the show cause notice through an order-in-original dated 27th July 2022.

The petitioner sought rectification of errors under Section 161 of the Act, citing the non-reference of certain precedents in the respondent’s decision. They argue that the strict observance of Section 16 should not jeopardize their interests, as the Act aims to protect both the revenue and the taxpayer’s rights.

Mr. Kutty argues that while the Department may reverse credit in the purchaser’s hands, this is a protective measure that should be reversed and credit restored if the supplier fulfills their liability. He emphasizes the need for a mechanism to address such situations.

Although the court doesn’t intend to intervene in the assessing authority’s conclusion, it notes that the procedure followed contravenes the third proviso to Section 16 of the Act, which mandates due process when proposing an adverse view.

In summary, Mr. Kutty, representing the respondent, argues that the petitioner must ensure compliance with Section 16 conditions to claim ITC, while also highlighting procedural errors in the respondent’s decision-making process.

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Pinstar Automotive India Pvt. Ltd

For Reference Visit:
Madras High Court

Read Another Case Law:
GST Case Law