The Madras High Court granted relief to the APL Apollo tubes by quashing the Goods and Services Tax ( GST ) order over lack of specific reasons for the denial of Input Tax Credit ( ITC ) and discrepancies in the treatment of evidence pertaining to freight charges.
The petitioner, APL Apollo Tubes, engaged in the manufacture and supply of iron and steel tubes and pipes, found themselves at odds with the tax authorities following a show cause notice issued, to which the petitioner replied. Subsequently, the impugned order was issued, which was challenged by the petitioner immediately though this petition.
By contending that none of these items fall within the scope of sub-section (5) of Section 17 of applicable GST enactments, the Petitioner’s counsel submitted that the impugned order sets out no reasons for concluding that ITC cannot be availed in respect of these items under Section 17(5). The other issues stated by the counsel alongwith these are issues relating to the issuance of credit notes by the supplier and issues relating to freight.
In response, Mr. C. Harsha Raj, Additional Government Pleader representing the respondents, defended the order, asserting that sufficient opportunity had been afforded to the petitioner to present evidence and such evidence should not be re-appraised in course of proceedings under Article 226 especially when the petitioner has a statutory remedy in respect thereof.
In addition, as regards the disallowance of ITC on the basis that the items do not qualify for Input Tax Credit, he contended that the fact that the petitioner was not eligible.
Upon scrutiny of the impugned order, the Court identified shortcomings in the assessment process. Specifically, it noted discrepancies in the treatment of evidence pertaining to freight charges and the reasoning behind the denial of Input Tax Credit.
Consequently, the Court deemed it appropriate to set aside the impugned order in relation to these issues and remanded them for reconsideration by the assessing officer.
A Single bench of Justice Senthilkumar Ramamoorthy directed the State Tax Officer to provide the petitioner with a fair opportunity, including a personal hearing, and instructed the issuance of a fresh order within two months. Furthermore, it clarified that its observations were not binding on the assessing officer during reconsideration.
Consequently, the writ petition was disposed of.
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