2019 (11) TMI 894 - HC - GST

Refund of allegedly wrongfully availing Input Tax Credit paid, under protest - Validity of provisions in section 16(2)(c) and section 42 in Central Goods and Service Tax Act, 2017 - HELD THAT - Petitioners do not have a case. Investigation is ongoing. No demand has yet been raised, the payment having been made voluntarily. In an earlier writ petition, filed by petitioners, there was direction for the investigation to proceed. Petitioners have not challenged such order. Mr. Kar responds, the challenge here was not urged in his clients earlier writ petition. No express interim order is necessary in view of submissions recorded above and in earlier order dated 20th September, 2019. List on 10th January, 2020.

Summary

Issues:
Challenge against provisions in section 16(2)(c) and section 42 of the Central Goods and Service Tax Act, 2017 for refund of allegedly wrongfully availed Input Tax Credit (ITC) paid under protest.

Analysis:
The writ petition challenges the provisions in section 16(2)(c) and section 42 of the Central Goods and Service Tax Act, 2017, seeking an interim order for the refund of allegedly wrongfully availed Input Tax Credit (ITC) by the petitioners. The petitioners, represented by Mr. Kar, a senior advocate, argue that they are entitled to ITC for paying input tax on raw materials used in manufacturing finished goods. However, the Department denied ITC to the petitioners and made them pay additional output tax during searches of their premises, alleging excess ITC claimed on inward supplies. An amount of &8377;11,56,363/- was paid under protest for ITC reversal against certain suppliers. Mr. Kar requests interim orders to address this issue.

The Union of India, represented by Mr. S. Bhattacharya, states that an investigation is ongoing, emphasizing the provision under section 16(2)(b) which suggests that the Department suspects ITC was claimed against goods not received. The payment made by the petitioners was voluntary and based on disclosures of suppliers. The Department plans to follow the prescribed procedure to uncover further wrongful ITC claims by the petitioners upon discovering additional suppliers during the investigation. Mr. Bhattacharya seeks a direction to file an affidavit to support their position.

On the other hand, the CGST Authority, represented by Mr. Aman Malik, argues that the writ petition is premature and not maintainable as the investigation is still in progress and no demand has been raised yet, with the payment being voluntary. Referring to a previous writ petition by the petitioners where investigation was directed to proceed, Mr. Malik contends that the current challenge was not raised earlier by the petitioners. Mr. Kar responds by clarifying the distinction between the issues raised in the previous writ petition and the current challenge.

Considering the submissions from all parties and a previous order, the court decides that no express interim order is necessary at the moment. The respondents are directed to file an Affidavit-in-Opposition within four weeks, and the petitioners are allowed to file a reply if necessary. The court schedules the next hearing for January 10, 2020, indicating the procedural steps to be followed in the case.