2021 (12) TMI 417 - HC - GST

Principles of Natural Justice - Transitional Credit - un-utilized input tax credit in their VAT Account - adequate notice was given to the petitioner and petitioner failed to avail the opportunity - HELD THAT - There is no clarity on what basis an amount of ₹ 10,32,218/- has been determined in the impugned order. The petitioner has also not filed a reply in response to notice dated 20.11.2020. Ultimately, if the petitioner is liable to establish that the amount of ₹ 5,34,633/- was the transitional credit in TRANS-1 it cannot be denied by the respondent. On the other hand if the petitioner is liable to pay any tax, it requires a detailed consideration by the respondents. Considering the same the impugned orders are quashed and the case is remitted back to the 1st respondent to pass a speaking order within the period of 45 days from the date of copy of receipt of this order - the order to be passed by the 1st respondent shall be after due compliance within the principles of natural justice and after affording an opportunity of hearing to the petitioner. Petition allowed.

Summary

Issues:
1. Unutilized input tax credit post-GST implementation.
2. Failure to furnish documents for transitional credit.
3. Notice served during lockdown period.
4. Determination of transitional credit amount.
5. Compliance with principles of natural justice.

Analysis:

1. The petitioner claimed that post-GST implementation, an unutilized input tax credit of ?5,34,633 was in their VAT Account. However, they could only furnish an invoice for ?4,97,585, leading to discrepancies in transitional credit documentation.

2. A notice was issued to the petitioner's factory, requesting specific documents and setting a hearing date. Due to lockdown restrictions, the notice remained unserved, resulting in the issuance of an impugned order without the petitioner's participation in the proceedings.

3. The petitioner, citing lockdown constraints, argued their unawareness of developments and inability to correspond with the respondents promptly during the lockdown period, affecting their ability to address the transitional credit issue effectively.

4. The court noted the lack of clarity in determining the amount of ?10,32,218 in the impugned order and the absence of a reply from the petitioner to the initial notice. The court emphasized the need for the petitioner to establish the correct transitional credit amount and directed a detailed consideration by the respondents if any tax liability exists.

5. After hearing both parties, the court quashed the impugned orders, remitting the case back to the 1st respondent for a detailed, speaking order within 45 days. The petitioner was granted 15 days to respond to the initial notice and instructed to appear for oral submissions. The 1st respondent was directed to ensure compliance with natural justice principles in the new order.

In conclusion, the writ petitions were allowed based on the above observations, with connected miscellaneous petitions closed and no costs imposed. The judgment emphasized the importance of due process and proper documentation in resolving transitional credit disputes post-GST implementation.