Case Title | Rays Power Infra Private Limited vs Superintendent of Central Tax |
Court | Telangana High Court |
Honorable Judges | JUSTICE P.SAM KOSHY JUSTICE N. TUKARAMJI |
Citation | 2024 (02) GSTPanacea 29 HC Telangana WRIT PETITION No.298 of 2024 |
Judgment Date | 28-February-2024 |
The petitioner has filed a Writ Petition under Article 226 of the Constitution of India seeking relief from the impugned order issued in Original No.1/2023-24-GST (Supdt.), dated 15.11.2023, and the consequent demand raised in Form DRC-07 bearing reference No.ZD361223018542R, dated 11.12.2023. The petitioner contends that the said order and demand are void, illegal, arbitrary, without jurisdiction, and without authority of law, and requests the Court to set them aside.
The Court heard arguments from both parties, with Mr. M. Naga Deepak representing the petitioner and Mr. Dominic Fernandes representing the Central Board of Indirect Tax (C.B.I.C.), for the respondents.
The impugned order confirmed a demand of ₹.92,160/- (comprising CGST ₹.46,080/- and SGST ₹.46,080/-) for irregularly availed Input Tax Credit (I.T.C.) on ineligible supplies. Additionally, authorities confirmed a demand notice for irregularly availed I.T.C. on common services used for providing taxable services and exempted supplies amounting to ₹.2,34,700/-. Interest amounts of ₹.6,642/- and ₹.39,100/- were also demanded in accordance with Section 50 of the Central Goods and Services Tax Act, 2017 (C.G.S.T. Act) along with corresponding provisions of the Telangana Goods and Services Tax Act, 2017 (T.G.S.T. Act), and Section 20 of the Integrated Goods and Services Tax Act, 2017 (I.G.S.T. Act).
Furthermore, penalties were imposed under Section 74(9) read with Section 122(2)(b) of the C.G.S.T. Act, corresponding provisions of the T.G.S.T. Act, and Section 20 of the I.G.S.T. Act. The disputed tax period spans from July 2017 to March 2019.
The petitioner, a company involved in solar electricity generation and registered under the Central Goods and Services Tax (C.G.S.T.) Act and Integrated Goods and Services Tax (I.G.S.T.) Act, underwent a G.S.T. audit by the third respondent for the period from July 2017 to March 2019. After the audit, the petitioner was informed of the findings on October 14, 2021. Upon receipt of the audit findings, the petitioner promptly paid the additional tax owed along with interest, as indicated by the demand made on October 28, 2021. The final audit report, issued on November 10, 2021, acknowledged the petitioner’s payment, which was duly received by the department.
However, despite the complete payment made by the petitioner, the first respondent issued a show-cause notice on April 20, 2022, under Section 74(1) of the C.G.S.T. Act. In response, the petitioner submitted a detailed reply on September 4, 2023, highlighting the discharge of their entire tax liability along with interest on October 28, 2021, and asserting that any irregularly claimed Input Tax Credit (I.T.C.) had already been reversed. Despite this submission, the authorities proceeded with the show-cause proceedings.
The petitioner was granted a personal hearing, but the authorities ultimately confirmed the demand raised, leading the petitioner to file the present writ petition. The counsel for the petitioner argued that initiating proceedings under Section 74(1) of the C.G.S.T. Act was inherently unlawful, and therefore, the entire process and the final order issued by the third respondent should be invalidated.
In summary, the petitioner underwent a G.S.T. audit, complied with the audit findings by promptly paying the additional tax and interest, and provided explanations regarding any irregularities. Despite these actions, the authorities proceeded with a show-cause notice, prompting the petitioner to challenge the legality of the proceedings through a writ petition.
The argument presented by the learned counsel for the petitioner revolves around Section 73 of the Central Goods and Services Tax (C.G.S.T) Act, with particular emphasis on Sub-Section (5) of Section 73. The contention put forth is that the petitioner’s case falls squarely within the scope of Section 73(5), thus warranting the setting aside or quashing of both the show-cause proceedings and the final order being challenged in the writ petition.
The counsel further asserts that the petitioner promptly rectified the situation upon being informed of the audit findings, clearing the entire tax liability related to the incorrectly availed Input Tax Credit (I.T.C) and settling the interest amount without delay. Notably, this action was taken even before the submission of the final audit report on October 14, 2021. It’s argued that the initiation of show-cause proceedings on April 20, 2022, after the petitioner had already rectified the tax liability, violates the proviso to Section 73(5).
According to the petitioner’s counsel, the authorities erred in commencing proceedings under Section 74, which would be deemed unsustainable given that the petitioner falls within the ambit of the proviso to both Section 73(1) and 73(5) of the C.G.S.T Act. Therefore, the petition calls for allowance on the grounds that the actions of the respondents do not align with the provisions outlined in the C.G.S.T Act.
Download Pdf:
Rays Power Infra Private Limited
For Reference Visit:
Telangana High Court
Read Another Case Law:
GST Case Law