Madras High Court
M/S.Thirumagal Dyeing Works vs / on 11 November, 2024
W.P.(MD) No.15266 of 2024
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 11.11.2024
CORAM:
THE HONOURABLE MR.JUSTICE K.KUMARESH BABU
W.P.(MD) No.15266 of 2024
and
W.M.P.(MD) Nos.13383 and 13384 of 2024
M/S.Thirumagal Dyeing Works
rep. by its Partner,
V.A.Panneerselvam ... Petitioner
/vs./
1.Joint Commissioner of GST and Central Excise,
1, Williams Road,
Cantonment,
Tiruchirappalli 620 001.
2.Assistant Commissioner,
Karur Jurisdiction, Karur
Erode, Tamil Nadu. ... Respondents
PRAYER: Writ Petition filed under Article 226 of the Constitution of India for
issuance of Writ of Certiorari, to call for the records of 1st respondent in Order-
in-Original No.16/2023-GST (DIN-20231059XN000000A7B2) dt.17.10.2023
and the consequential summary of the order in Form GSTR DRC-07 in
Ref.No.ZD330524100537Q dt.15.05.2024 issued by the 2nd respondent and
1/7
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W.P.(MD) No.15266 of 2024
quash the order dt.17.10.2023 issued by the 1st respondent and the consequential
order dt.15.05.2024 issued by the 2nd respondent.
For Petitioner : Mrs.Hema Muralikrishnan
For Respondents : Mr.R.Nanda Kumar
Senior Standing Counsel
ORDER
The challenge in this writ petition is to the DRC-07 notice issued by the
second respondent herein, wherein a demand had been made in respect of three
counts.
2. Heard Mrs.Hema Muralikrishnan, learned counsel for the petitioner and
Mr.R.Nanda Kumar, learned Senior Standing Counsel for the respondents.
3. The learned counsel for the petitioner had vehemently contended that the
first respondent herein pursuant to the show cause notice issued to the petitioner
and after hearing the petitioner had held that the petitioner had reversed the
wrongly availed ITC in the petitioner's GSTR-3B filed for the month of February,
2020 on 28.10.2021 and based upon the factual finding ordered that the amount
had been wrongly availed, which was reversed subsequently to be treated as
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payment under Section 73 of the CGST Act, 2017. When that be so, the DRC-07
notice including the said amount by the second respondent is wholly erroneous
and hence, the learned counsel for the petitioner would pray this Court to set
aside the said portion of the DRC- 07 notice. With regard to the other two
documents, she would submit that the petitioner had proposed to invoke the
amnesty that had been provided by the Department.
4. Countering such argument, Mr.R.Nandakumar, learned Senior Standing
Counsel appearing for the respondents, had vehemently contended that there was
no error in including the said amount to the demand notice. Even if it is a wrong
demand, he would submit that it is for the petitioner to file an appeal against the
same and get it rectified. Further reason has also been given in the counter
affidavit filed by the second respondent that there is no provision in the portal to
enter the amount or adjust the amount which was already paid/reversed.
5. He also relied upon the various provisions of the GST Act, 2017 to
contend that there is no error in the DRC-07 notice. He had also taken me through
the various averments made in the counter affidavit filed by the second
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respondent to sustain the impugned notice. He had also relied upon the judgment
of the Hon'ble Apex Court in the case of Asstt.Commr. (CT) LTU, Kakinada Vs.
Glaxo Smith Kline Consumer Health Care Ltd., reported in 2020 (36) G.S.T.L.
305 (S.C.) to contend that the writ petition itself is not maintainable.
6. I have considered the rival submissions made by the learned counsel on
either side.
7. The notice had been issued by the first respondent to the petitioner,
which has also been duly responded. Pursuant to the personal hearing that had
been granted to the petitioner, the first respondent had considered the case in
detail and had passed orders on 17.10.2023. With respect to the third item in the
demand notice, which arises out of wrong availing of ITC credit by the petitioner,
the first respondent had recorded the factual finding that the petitioner had
reversed the wrong claim even as early as on 28.02.2021 in their GSTR-3B for
the month of February, 2020.
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8. Based upon the said factual finding, the first respondent had also ordered
that the wrongly availed ITC of Rs.3,76,67,083/-, which was paid/reversed
subsequently by the petitioner in its GSTR-3B, was to be treated as payment
under Section 73 of the CGST Act, 2017. When that be so, the petitioner had been
again demanded in the DRC-07 notice to pay the said amount together with
interest. Even though the learned standing counsel had strenuously relying upon
the counter affidavit tried to sustain the DRC-07 notice, I do not find any
averment specifically sustaining the said demand.
9. In fact, in the counter affidavit, the second respondent had categorically
admitted that the petitioner had reversed the said wrongly availed ITC, however
had expressed his inability, as the portal would not permit such reversal. The said
reason given by the second respondent is wholly unacceptable. He ought not to
have included the said demand when the first respondent himself had ordered
such reversal to be treated as a payment under Section 73 of the CGST Act, 2017.
The demand in respect of the said account in item No.3 is wholly erroneous and
therefore, I am inclined to set aside the said demand under item No.3 of the
impugned DRC-07 notice. In respect of the other claims as submitted by the
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learned counsel for the petitioner, he is at liberty to approach the concerned
Authority seeking amnesty.
10. In view of the aforesaid findings, the Writ Petition is partly allowed
setting aside the demand in respect of item No.3 of the impugned DRC-07 notice
dated 15.05.2024 and in all other aspects, the petitioner is at liberty to workout
his remedy as available in law. However, there shall be no order as to costs.
Consequently, connected Miscellaneous Petitions are closed.
Index : Yes / No 11.11.2024
Internet : Yes / No
mm
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K.KUMARESH BABU, J.
mm
11.11.2024
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