2020 (7) TMI 578 - HC - GST

Demand of deposit of inadmissible input tax credit and file DRC-03 challan without initiating any adjudication process - On bhalf of revenue it is submitted that, the intent behind issuing the impugned letter dated 11th June, 2020 was to give an opportunity to the petitioner to come forward and either explain the transaction or deposit the tax with minimum interest and penalty under Section 74(5) of the CGST Act without going through the adjudication procedure. He clarifies that if after the investigation the respondent is not satisfied with the petitioner s response, it shall follow the adjudication process for recovery. HELD THAT - The aforesaid statement made by learned counsel for respondent nos. 2 and 3 is accepted by this Court and said respondents are held bound by the same. It is clarified, as a matter of abundant caution, that as the demand is disputed by the petitioner, no coercive steps shall be taken for recovery of the said demand without following the adjudication process.

Summary

Issues:
Challenge to letter and summon issued regarding alleged inadmissible input tax credit without adjudication process under CGST Act.

Analysis:
The petition challenged a letter and summon issued by respondent No.3 demanding the deposit of a specific amount as alleged inadmissible input tax credit without initiating any adjudication process under Section 73 or Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioner argued that the amount was being requested without a show cause notice or specifying any tax period, and a summon was issued to pressure the petitioner to appear and submit the amount. The court issued notice to the respondents, and respondent No. 2 and 3 clarified that the intent behind the letter was to provide an opportunity for the petitioner to explain or deposit the tax with minimum interest and penalty under Section 74(5) of the CGST Act without immediate adjudication. It was agreed that if the investigation did not satisfy the respondent, the adjudication process for recovery would be followed. The court accepted this statement and held the respondents bound by it, ensuring no coercive steps would be taken for recovery without following the adjudication process. The petitioner was directed to cooperate in the investigation process.

The petitioner, upon understanding the clarification and assurance provided by respondent No. 2 and 3, decided not to pursue the writ petition further. Consequently, the writ petition and application were disposed of. The court ordered the uploaded of the order on the website immediately and forwarded a copy to the learned counsel through e-mail.