The Andhra Pradesh High Court has dismissed the Writ Petition against the denial of GST input tax credit (ITC) claim done manually and not by filing Form GST ITC 02 electronically. It was found that the assessee failed to submit evidence before the respondent even after providing an opportunity.
The petitioner –Tikona Infinet Private Limited (TIPL) has filed the writ petition for a Writ of Mandamus under Article 226 of the Constitution of India, to declare the impugned show cause notice in Form GST DRC-01, issued by the 3rd respondent- the Deputy Assistant Commissioner, State Taxes, Dabagardens Circle, Visakhapatnam-1 Division, Andhra Pradesh, as illegal, arbitrary and in contravention of the Central Goods and Services Tax (CGST) / Andhra Pradesh Goods and Services Tax (APGST) Act and Rules, and consequently to set aside the same.
The petitioner has prayed for a further declaration that the Input Tax Credit (ITC) claim cannot be denied on the basis of transfer done manually and not by filing Form GST-ITC 02 electronically under Section 18 (3) of CGST Act read with Rule 41 of the CGST Rules, as functionality to file Form GST-ITC 02 electronically was absent.
The petitioner/TIPL is a Company registered under the Companies Act, 1956 and is inter alia engaged in providing internet services across India from various States, including from the State of Andhra Pradesh. The 3rd respondent Deputy Assistant Commissioner, State Taxes issued a show cause notice in From GST DRC-01.
It was held that the petitioner claimed ITC for Rs.31,81,529/- in contravention of the provisions of Section 16 of the APGST Act 2017, and therefore, it was proposed to levy Rs.31,81,529/- towards the excess claim of input tax more than the eligibility as per the provisions of the APGST Act 2017. It was also proposed that the petitioner was liable to pay Rs.38,46,389/- towards the discrepancies identified in the said notice. The petitioner was also informed that he was liable to pay interest under Section 50 of the GST Act 2017 towards the short payment of taxes.
The petitioner/TIPL entered into a Business Transfer Agreement (BTA), with Tikona Digital Networks (TDN), vide which the business of TDN was transferred to the petitioner, as a going concern. It is submitted that the TDN filed a letter dated 13.09.2017 to the Commercial Tax Officer intimating that as per Rule 41 (1) of CGST Rules, a registered person intending to transfer the input tax credit is required to file GST-ITC 02 on the common portal to the transferee and TDN intended to transfer unutilized credit in the electronic credit ledger of TDN on the date of slump sale to TIPL, but Form ITC-02 was not available on GSTN portal, and consequently, TDN was not able to transfer on GSTN portal and TIPL was unable to utilize the credit balance appearing in the electronic credit ledger of TDN.
The Assistant Commissioner (ST), issued notice GST ASMT-10, intimating the discrepancy in the return after scrutiny (scrutiny notice) and calling for an explanation for such discrepancy. The opportunity of hearing was provided to submit the explanation, to lead the evidence before the 3rd respondent.
A division bench comprising of Justice Ravi Nath Tilhari & Justice A V Ravindra Babu observed that the petitioner has not been deprived of availing the input tax credit as of now, but the show cause notice has been issued granting the opportunity.
The petitioner has the opportunity and on such opportunity on verification of such fact, the authority has yet to consider the petitioner’s claim of input tax credit. It was argued that the petitioner should approach the authority which has issued the show cause notice and file the objections with evidence, and if so desire, to avail the opportunity of personal hearing with due intimation to the authority concerned.
Since the period granted to the petitioner to file the objections and appear before the authority concerned has already expired, the court held that “if the petitioner files objections with evidence and shows his willingness for personal hearing, within one week from the date of receipt of copy of this order to the authority concerned, the same shall be considered and decided, as expeditiously as possible, preferably within 4 (four) weeks from the date of receipt of copy of this order, by law.”
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