Karnataka High Court

M/S. Bosch Automotive Electronics vs The State Of Karnataka on 29 July, 2024

Author: S.R.Krishna Kumar

Bench: S.R.Krishna Kumar

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                                                          NC: 2024:KHC:29773
                                                      WP No. 24897 of 2023




                       IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                            DATED THIS THE 29TH DAY OF JULY, 2024

                                          BEFORE
                         THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR
                           WRIT PETITION NO. 24897 OF 2023 (T-RES)
                BETWEEN:

                     M/S. BOSCH AUTOMOTIVE ELECTRONICS
                     INDIA PRIVATE LIMITED,
                     703, C/O BOSCH LIMITED,
                     NAGANATHAPURA,
                     BANGALORE - 560 010.
                     (REPRESENTED BY G.R. KOWSALYA
                     COMPANY SECRETARY)
                     INCORPORATED UNDER THE
                     COMPANIES ACT, 1956.
                                                               ...PETITIONER
                (BY SRI. RAVI RAGHAVAN, ADVOCATE,
                   SRI. NISCHAL K.M, ADVOCATE AND
                   SRI. ROHAN KARIA, ADVOCATE)

                AND:

                1.   THE STATE OF KARNATAKA
Digitally            THROUGH THE GOVERNMENT PLEADER,
signed by            HIGH COURT OF KARNATAKA,
YAMUNA K L           BENGALURU - 560 001.
Location:
High Court of   2.   DEPUTY COMMISSIONER OF COMMERCIAL TAXES,
Karnataka            (ENFORCEMENT)-02, SOUTH ZONE,
                     VTK-2, BUILDING, KORMANGALA,
                     BENGALURU - 560 047.
                                                       ...RESPONDENTS
                (BY SRI. HEMA KUMAR, AGA)
                      THIS WP IS FILED UNDER ARTICLE 226 OF THE
                CONSTITUTION OF INDIA PRAYING TO QUASHING THE IMPUGNED
                SHOW CAUSE NOTICE BEARING NO. ADCOM (ENF)SZ/DCCCT-
                02/INS-49/2022-23 DATED 02-08-2023 ISSUED BY THE R2 IN FORM
                GST DRC 1 ENCLOSED AT ANNEXURE-A DEMANDING INPUT TAX
                CREDIT AVAILED BY THE PETITIONER AND PENALTY AND ETC.,
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                                                   NC: 2024:KHC:29773
                                               WP No. 24897 of 2023




      THIS PETITION, COMING ON FOR PRELIMINARY HEARING,
THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM:     HON'BLE MR JUSTICE S.R.KRISHNA KUMAR


                             ORAL ORDER

In this petition, petitioner is seeking for the following reliefs:

"a) issue a writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ or order or direction under Article 226 of the Constitution of India quashing the impugned Show Cause Notice bearing No. ADCOM(ENF)/SZ/DCCT-02/INS-49/2022-

23 dated 02.08.2023 issued by the Respondent No.2 in FORM GST DRC-01 enclosed at Annexure-A demanding input tax credit availed by the Petitioner along with interest and penalty;

b) hold that the Petitioner has rightly availed input tax credit of Rs.3,92,52,317/- in respect of the manpower supply services received by the Petitioner during the period 2017-18 to 2022-23;

c) pass such further order(s) and other reliefs as the nature and circumstances of the case may require."

2. Heard learned counsel for the petitioner and learned AGA

for the respondents and perused the material on record.

3. In addition to reiterating various contentions urged in the

petition and referring to the material on record, learned Counsel for

the petitioner invited my attention to the impugned Show Cause

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Notice issued under Section 73(1) of the CGST/KGST Acts read

with IGST Acts, 2017 in order to point out that respondent No.2 has

come to the erroneous conclusion that the petitioner was not

eligible to claim IGST Input Tax Credit (for short 'ITC') for the

period July 2017 to March 2023 on the ground that there was a

delay in taking credit beyond the stipulated period as contemplated

under Section 16(4) of the CGST Act, 2017. In this context, it is

pointed out that the said position was clarified by the CBIC in its

subsequent circular No.211/5/2024-GST, dated 26.06.2024

wherein it is clarified that there was no delay on the part of the

petitioner in availment of ITC particularly, when the self invoices

had already been issued by 31.05.2023. It is therefore submitted

that in the light of the subsequent circular issued by CBIC, the

impugned Show Cause Notice deserves to be quashed.

4. Per contra, learned AGA fairly submits that the said

position regarding availment of ITC on the ground of belated claim

has been clarified by the aforesaid circular, which is binding upon

the respondents. It is however, submitted that the present petition

is premature and if the petitioner files his reply to the Show Cause

Notice and brings to the notice of respondent No.2, respondent

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No.2 may be directed to consider the same and proceed further in

accordance with law.

5. Before adverting to the rival contentions, it is relevant to

extract the aforesaid circular issued by the CBIC, which reads as

under:

"2.5 It can be seen that section 16(4) of CGST Act links the time limit for ITC availment with the financial year to which the invoice or debit note pertains. As discussed in Para 2.3 above, in case of supplies where the supplier is unregistered and recipient is registered and the tax has to be paid by the recipient on RCM basis, the recipient is required to issue invoice in terms of the provisions of section 31 (3) (f) of CGST Act and pay the tax on the same in cash under RCM. Further, as discussed in Para 2.1 above, ITC cannot be availed by a registered person in respect of any supply of goods or services or both received by him, as per the provisions of section 16 (2)

(a) of CGST Act, unless he is in possession of a tax invoice or debit note or such other tax paying documents as may be prescribed.

2.6 A combined reading of the above provisions leads to a conclusion that as ITC can be availed by the recipient only on the basis of invoice or debit note or other duty paying document, and as in case of RCM supplies received by the recipient from unregistered supplier, invoice has to be issued by the recipient himself, the relevant financial year, to which invoice pertains, for

NC: 2024:KHC:29773

the purpose of time limit for availment of ITC under section 16(4) of CGST Act in such cases shall be the financial year of issuance of such invoice only. In cases, where the recipient issues the said invoice after the time of supply of the said supply and pays tax accordingly, he will be required to pay interest on such delayed payment of tax.

2.7 Accordingly, it is clarified that in cases of supplies received from unregistered suppliers, where tax has to be paid by the recipient under reverse charge mechanism (RCM) and where invoice is to be issued by the recipient of the supplies in accordance with section 31 (3) (f) of CGST Act, the relevant financial year for calculation of time limit for availment of input tax credit under the provisions of section 16(4) of CGST Act will be the financial year in which the invoice has been issued by the recipient under section 31(3)(f) of CGST Act, subject to payment of tax on the said supply by the recipient and fulfilment of other conditions and restrictions of section 16 and 17 of CGST Act. In case, the recipient issues the invoice after the time of supply of the said supply and pays tax accordingly, he will be required to pay interest on such delayed payment of tax. Further, in cases of such delayed issuance of invoice by the recipient, he may also be liable to penal action under the provisions of Section 122 of CGST Act."

6. As can be seen from paragraph Nos.2.5, 2.6 and 2.7, the

petitioner would be entitled to availment of ITC and cannot be

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deprived of the same or fastened with liability to pay interest on

account of his claim having been filed belatedly as can be seen

from the circular. The aforesaid circular completely supports the

claim of the petitioner especially in the light of the judgment of the

Apex Court in the K.P.VARGHESE Vs. INCOME TAX OFFICE,

ERNAKULAM, AIR 1981 SC 1922 to the effect that a CBIC circular

is binding upon the respondents. However, since the said circular

was issued during the pendency of the present petition and the

respondents did not have the benefit of the said circular at the time