The High Court of Andhra Pradesh dismissed the plea challenging the denial of the GST input tax credit (ITC) claim on the basis that the transfer was done manually, not electronically, and held that the petitioner’s plea to read down the provisions of Rule 41 of the CGST Rules and to direct to accept the manual filing deserves rejection, as neither Rule 41 of the CGST Rules is under challenge nor is shown to be contrary to any provision of the CGST Act, and particularly when the petitioner has the opportunity before the Authority pursuant to the show cause notice to justify manual filing.
Brief Facts:
The petitioners, is a company engaged in providing internet services across India from various states, including from the State of Andhra Pradesh. The instant petition has been filed by the petitioner for a writ of Mandamus to declare the impugned show cause notice in Form GST DRC-01 by the respondent as illegal, arbitrary and in contravention of the CSGT Andhra Pradesh Goods and Services Tax (APGST) Act and Rules, and consequently to set aside the same.
Contentions of the Petitioner:
The petitioner's learned counsel sserted that it submitted the Form GST-ITC 02 manually, rather than through electronic means, invoking the provisions outlined in Section 18(3) of the Central Goods and Services Tax (CGST) Act, coupled with Rule 41 of the CGST Rules. Despite this, the respondent declined to acknowledge this mode of filing and maintained a stance negating the petitioner's eligibility for Input Tax Credit (ITC) claims. As a result, the petitioner argued that engaging with the respondent by raising objections and presenting supporting evidence would be an exercise in futility.
Contentions of the Respondent:
The learned counsel for the respondent argued that the petitioner possesses the option to furnish an explanation, provide evidence before the department, and take advantage of the opportunity for a personal hearing. According to the respondent's counsel, only after the petitioner utilizes such opportunities can they subsequently challenge any adverse decisions through appropriate proceedings as per statutory provisions. The counsel emphasized that sidestepping the prescribed procedure and remedy by directly filing a writ petition to contest the show cause notice would not be considered maintainable.
Observations of the Court:
The bench comprising Justice Ravi Nath Tilhari and Justice A V Ravindra Babu noted that the petitioner's request to reinterpret the provisions of Rule 41 of the Central Goods and Services Tax (CGST) Rules and to compel the acceptance of manual filing is not tenable. The bench emphasized that Rule 41 of the CGST Rules was neither contested nor demonstrated to be in conflict with any provision of the CGST Act. Furthermore, the court highlighted that the petitioner has the chance to justify manual filing before in response to the show cause notice, making the plea for intervention unwarranted.
The bench noted that the petitioner, functioning as a company registered under the Companies Act, 1956, is involved in providing internet services across various states in India, including the State of Andhra Pradesh. A show cause notice was issued by the Deputy Assistant Commissioner, State Taxes, under GST DRC-01.
The issuance of the notice stemmed from the respondent's determination that the petitioner had claimed Input Tax Credit (ITC) amounting to Rs. 31,81,529 in violation of the provisions outlined in Section 16 of the Andhra Pradesh Goods and Services Tax (APGST) Act 2017. Consequently, it was proposed to impose a liability of Rs. 31,81,529 for the excess claim of input tax, exceeding the eligibility criteria as per the provisions of the APGST Act 2017. Additionally, the notice proposed that the petitioner be held accountable for an amount of Rs. 38,46,389 concerning the discrepancies identified in the aforementioned notice.
Further, it was noted that The Assistant Commissioner issued a notice in the form of GST ASMT-10, notifying the discrepancy found in the return subsequent to scrutiny (referred to as a scrutiny notice). The notice requested an explanation from the petitioner regarding the identified discrepancy. In response, the petitioner submitted a reply or explanation. After evaluating the petitioner's response, a show-cause notice was subsequently issued. This notice afforded the petitioner an opportunity to file objections, accompanied by documentary evidence, and also extended an invitation for a personal hearing if the petitioner wished to avail themselves of such a provision.
The decision of the Court:
The court dismissed the petition and determined that the timeframe given to the petitioner for submitting objections and appearing before the relevant authority had already lapsed.
Case Title: Tikona Infinet Private Limited vs. The State of Andhra Pradesh and others.
Coram: Hon’ble Sri Justice Ravi Nath Tilhari, Hon’ble Sri Justice A V Ravindra Babu
Case No.: Writ Petition No. 28743 of 2023
Advocate for the Applicant: Mr. Kalepu Yashwanth
Advocate for the Respondent: Mr. S A V Saikumar
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