Difficulty in understanding GST Provision at Initial Period of Implementation: Kerala HC sets aside Disallowance of ITC [Read Order]

The Kerala High Court set aside the disallowance of input tax credit (ITC) on the ground that there was difficulty in understanding GST provision at the initial period of implementation of the GST.

The petitioner, Anaz Abdul Rahiman Kutty is a registered dealer under the provisions of the CGST/SGST Act. The petitioner had filed monthly returns GSTR 3B for the Assessment Year 2017-18. On scrutiny of the monthly return filed by the petitioner, certain discrepancies were noticed, which were communicated to the petitioner through notice in Form GST ASMT 10 as per Rule 99(1) of the GST Rules.

The petitioner was directed to pay the said amount of tax as ascertained, along with the applicable interest in full by 27.01.2021, failing which show cause notice will be issued under Section 73(1). The petitioner was given an opportunity to file any objection or submission against the intimation. However, the petitioner neither remitted the tax and interest demanded in DRC 01A nor filed any objections to the tax ascertained.

In the circumstances, notice under Section 73(1) of the SGST/CGST Act along with DRC 01 was issued to the petitioner. The total tax, interest and penalty has been assessed at Rs.4,84,448/-.

The Counsel for the petitioner, KN Sreekumaran, submitted that it was the initial period of the implementation of the GST regime. The petitioner and other small dealers were facing a lot of difficulty. In fact, the supplier dealers have paid the tax for which the petitioner had claimed an input tax credit, and the petitioner has all the evidence to support his claim. The petitioner should be granted one opportunity before the Assessing Authority to produce all the documents to support his claim regarding his claim for the input tax credit to extent of Rs.4,84,448/-.

Rasmitha Ramachandran, Government Pleader, has however, opposed this prayer and submits that the petitioner was served with the notice, and he chose not to respond to the notice. There was compliance of the provisions of the Act and the principle of natural justice. Therefore, this petition is liable to be dismissed.

A Single Judge Bench of Justice Dinesh Kumar Singh observed that “The period involved is 2017-18 when the GST regime was rolled out. There may be some substance in the submission of the Counsel for the petitioner that the petitioner faced enormous difficulty in understanding the provisions of the GST Act. He also submits that the tax has been paid to the Government. Therefore, the Government is not at a loss for which the petitioner's claim for input tax claim has been disallowed.”

“Considering these aforesaid facts, the impugned order to the extent of disallowing the input tax credit of Rs.4,84,448/- is set aside. The petitioner is directed to appear before the State Tax Officer, Kayamkulam, with all the relevant documents in his possession to support his claim for the input tax credit of an amount of Rs.4,84,448/- for the Assessment Year 2017-18” the Court concluded.

To Read the full text of the Order CLICK HERE

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