Non-Availability of Relevant Form on GST Portal Not a Ground to Make Illegal Adjustment by Assessee: Allahabad HC [Read Order]

The High Court of Allahabad has held that the assessee could not make any illegal adjustment by use of the Form GSTR-3B of the transferor if the relevant form is not available in the Goods and Services Tax (GST) portal. It was also stated that the assessee could’ve waited or raised a proper grievance.

The bench of Chief Justice Pritinker Diwaker and Justice Ashutosh Srivastavaviewed that the stand of the Respondent No.2, for rejecting the claim of the petitioner in the wake of the admitted fact that the GST common portal was not online cannot be justified.

The petitioner is a registered Company engaged in providing internet service across India from various States including the State of U.P.  It entered into a Business Transfer Agreement on 17.08.2017 with another Company i.e. M/s Tikona Digital Network Pvt. Ltd. under which the business was transferred to the petitioner. M/s Tikona Digital Network (TDA) had accumulated ITS balance of more than Rs.3,1313,68,997/- which was unutilized.

The petitioner being entitled to transfer the ITC remaining unutilised under Section 18(3) of the GST Act made an attempt to transfer the same as per the procedure prescribed under Rule 41 of the CGST Rules, 2017.

The Rules provide that the Transferor shall file GST ITC-02 electronically on common portal along with a request for transfer of ITC remaining unutilized in his Electronic Credit Ledger (ECL) to the transferee. It is the case of the petitioner that functionality for filing Form IT-02 was not available on the common portal.

The non availability was communicated to the jurisdictional Assessing Authority. No response was received. Faced with serious working capital issues, the petitioner manually accepted and availed the ITC of Rs.3,13,68,997/-.

After a lapse of five years, the petitioner was served with a show cause notice dated 28.2.2023 requiring the petitioner to serve the differential ITC of Rs.2,88,35,905.60/- along with interest and penalty.

The petitioner filed the reply and alleged that the respondent authorities proceeded with the impugned order without considering the submissions of the petitioner.

The counsel of the respondent submitted that the averment of the petitioner to the effect that the objections have not been considered is ill founded inasmuch as the impugned order records that the objections have been filed and despite opportunity having been afforded to the petitioner for personal hearing, the same was not availed by the petitioner.

The bench noted that “the petitioner has been non suited on the ground that Form ITC-02 for transfer of input tax credit was not available on the GST Portal which was in nascent stage during the initial months after its implementation on 01.07.2017 and it was incumbent upon the petitioner to have raised a proper grievance on the GST portal help-desk and ought to have waited for the relevant Form to go live on the GST portal instead of making illegal adjustment by use of the Form GSTR-3B of the transferor and the transferee company and mere shortage of working capital cannot be an excuse to bypass the legal procedure laid down under the law.”

The bench set aside the impugned order passed by the respondent and directed to issue fresh order after considering the the objections of the petitioner and also affording it opportunity of hearing.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates