2022 (2) TMI 654 - HC - GST

Input ax Credit - composition scheme opted out - HELD THAT - Once a person ceases to pay tax under the composition scheme, as envisaged under Section 10 of the G.S.T. Act, he becomes entitled to claim an Input Tax Credit of the goods held in stock as on the date of transition by virtue of Section 18(1)(c) of the G.S.T. Act - It is not in dispute that for the purpose of claiming an Input Tax Credit under Section 18(1)(c) of the G.S.T. Act, a Form GST ITC 01 should have been filed within 30 days from the date of becoming eligible to avail the Input Tax Credit or within such time period, as may be extended by the Commissioner. It is the case of the writ applicant that since 24th September 2018, for not less than 15 times, he requested the concerned authority to look into the matter and permit him to upload the Form ITC 01. however, till this date, the concerned authority has not said anything in that regard - We have been able to understand the stance of the respondent No.5 as above. However, the question is whether all the doors are closed for the writ applicant for all times to come? Is there any scope still for the authority to permit the writ applicant to upload the Form ITC 01 for the purpose of claiming the refund towards the Input Tax Credit. The amount which could have been refunded at the relevant point of time is approximately ₹ 5 Lakh. The respondents, more particularly, the respondent No.5 are expected to find out some via media by which the writ applicant is able to upload the Form once again and seek refund - Post the matter on 16th February 2022 on top of the Board.

Summary

Issues:
Claim of Input Tax Credit under Section 18(1)(c) of the G.S.T. Act for a taxpayer opting out of the composition scheme and facing technical issues in filing Form GST ITC-01.

Analysis:
The judgment concerns a writ applicant, a small size taxpayer, who opted out of the composition scheme under Section 10 of the G.S.T. Act and sought to claim Input Tax Credit under Section 18(1)(c) of the Act. The applicant filed Form GST CMP-04 on 31st March 2018 to opt out of the composition scheme. However, facing technical issues, the applicant failed to file Form GST ITC-01 within the stipulated time frame as required by Rule 40 of the Central / Gujarat Goods and Services Tax Rules, 2017.

The respondent, through an affidavit-in-reply, contended that the applicant used the wrong offline tool for filing ITC-01 and did not face any technical glitches on the GST portal. The respondent highlighted that the applicant was an active taxpayer on the GST Portal from 1st July 2017 and opted out of the composition scheme on 31st March 2018. The respondent argued that the applicant's use of the incorrect offline tool, version 2.2.3, instead of the correct version, ITC_Offline_v1.0, led to the filing error.

The court acknowledged the respondent's stance but questioned whether all avenues for the applicant to claim the refund were closed. The court expressed that considering the substantial refund amount of approximately ?5 Lakh, it would be unjust to deny the applicant the opportunity to rectify the filing error. The court urged the respondents, particularly respondent No.5, to explore solutions to allow the applicant to refile Form ITC-01. The court directed the learned A.G.P. to communicate with the respondents to find a resolution and scheduled the next hearing for 16th February 2022.

In conclusion, the judgment delves into the technicalities of claiming Input Tax Credit under the GST regime, emphasizing the importance of adherence to procedural requirements while also recognizing the need for fairness and flexibility in exceptional circumstances to ensure taxpayers' rights are upheld.