No Double GST Action on Same Issue: Karnataka HC Quashes State Notice to Toyota Kirloskar Amid Central Proceedings [Read Order]
The Karnataka High Court quashes State GST notice to Toyota Kirloskar, ruling that the State cannot pursue the same ITC dispute already taken up by Central GST authorities.
toyota - kirloskar - Taxscan
toyota - kirloskar - Taxscan
In a recent ruling, the Karnataka High Court quashed a State GST ( Goods and Services Tax ) notice issued to Toyota Kirloskar Auto Parts Pvt. Ltd., holding that the State authorities could not initiate proceedings on the same issue when the Central GST authorities had already begun action.
Toyota Kirloskar Auto Parts had filed a writ petition challenging a show cause notice issued by the Deputy Commissioner of Commercial Taxes (Audit), demanding the reversal of input tax credit (ITC) claimed by the company along with interest under Sections 50(1) and 50(3) of the CGST/KGST Act, 2017.
The company's counsel argued that the Central GST authorities had already issued a notice and initiated proceedings regarding the same ITC claim, which related to Rs. 9.62 crore availed under the reverse charge mechanism for manpower supply services between July 2017 and October 2022.
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The petitioner's counsel relied on a previous ruling by the Karnataka High Court in a related case involving Toyota Kirloskar Motor Pvt. Ltd., dated 21.08.2024, where the court had clarified that once the Central authorities commenced proceedings, the State authorities could not issue separate notices on the same subject.
The petitioner also cited CBIC Circular No. 211/5/2024-GST, dated 26.06.2024, which reinforced their position on eligibility for ITC in such cases.
The GST department's counsel argued that the notices issued were within the framework of the GST laws and that the petitioner was liable to reverse the ITC with applicable interest. The department’s counsel also argued that the petitioner’s claims did not align with the statutory provisions governing ITC and that proceedings by the State authorities were valid.
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The single-judge bench comprising Justice S.R. Krishna Kumar observed that the State authorities lacked jurisdiction once the Central authorities had initiated proceedings on the same matter. The court held that the State GST notice issued to the petitioner was illegal and quashed it.
The court directed Toyota Kirloskar Auto Parts to file its reply to the notice issued by the Central GST authorities, allowing the department to reconsider the petitioner’s ITC claim in accordance with applicable laws and recent circulars.
The court also granted liberty to the petitioner to apply for relief under the Amnesty Scheme, allowing the proceedings to be considered under Section 73 of the CGST Act, which could potentially enable the petitioner to resolve the dispute on favourable terms. The writ petition was allowed.
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