2023 (8) TMI 970 - HC - GST

Cancellation of GST registration of petitioner - wrongful availment of ITC in respect of Inward Supply - Demand u/s 73 - HELD THAT - The gist of the stand of the respective parties creates an impression that taxes were paid by the purchaser petitioner to respondent no.6 in lieu of works done and invoices raised by respondent no.6 but whether the entire payments were made in lieu of the invoices in respect of which petitioner is making a claim for rightful availment of ITC by filing GSTR-I and GSTR-3B returns for the said tax period, is something which needs verification at the end of the respondent authorities. In order to facilitate the exercise since the petitioner and the respondent no.6 are separately assessed under Bokaro Circle and Garhwa Circle respectively, it would be proper that exercise of verification and reconciliation of the statements of the petitioner and the respondent no.6 be carried out by Additional Commissioner (Headquarters), Ranchi. Let the Additional Commissioner (Headquarters), Ranchi be impleaded as respondent no. 7 in the writ petition during course of the day by learned counsel for the petitioner in red ink. Learned counsel for the respondent State accepts notice on behalf of the newly added respondent. To carry out the exercise therefore, let the petitioner, respondent no.6 and the State Tax Officer, Bokaro and Garhwa or their authorized officers appear before the Additional Commissioner (Headquarters), Ranchi on 5th April 2023. Petitioner and respondents shall appear with all the relevant records, invoices, returns and books of accounts for the relevant tax period so that the verification exercise and reconciliation of their statements / returns can be carried out effectively. The Additional Commissioner (Headquarters), Ranchi shall submit a report on affidavit on the next date. Let the matter appear on 12th April 2023.

Summary

Issues:
The issues involved in the judgment are the cancellation of GST registration and the order passed under Section 73(9) of the JGST Act, 2017.

Cancellation of GST Registration:
The petitioner's grievance stems from the cancellation of GST registration issued on 30th December 2021 and the subsequent order under Section 73(9) of the JGST Act, 2017. The petitioner had previously approached the Court regarding the cancellation, which led to a direction for expeditious appeal resolution. The cancellation was based on the alleged wrongful availment of Input Tax Credit (ITC) and discrepancies between GSTR-3B and GSTR-2A/2B for the period from June 2020 to October 2020. The petitioner contends that the cancellation grounds were introduced after the period in question and asserts having paid the GST amount as per received bills and self-assessment. The respondent supplier, however, did not file GSTR-I or submit GSTR-3B returns, leading to the cancellation of registration.

Allegations and Defense:
In response to the petition, respondent no.6, engaged in civil construction work, explained that the non-filing of GST returns and non-payment of GST dues was due to personal circumstances, including a family member's illness. The respondent expressed willingness to pay the outstanding GST amount in installments, seeking a waiver of interest and penalty. The petitioner argued that the cancellation of registration was unjust as he had fulfilled his tax obligations based on invoices from respondent no.6. Legal precedents were cited to support the petitioner's claim of being a bona fide dealer not liable for the default of the selling dealer.

Court Directions and Verification:
The Court directed the State to seek instructions on the course of action regarding respondent no.6's admission of financial difficulties. It was decided that verification and reconciliation between the petitioner and respondent no.6 should be conducted by the Additional Commissioner (Headquarters), Ranchi. Both parties, along with tax officers, were instructed to appear with relevant records on 5th April 2023 for verification. If fault is found with respondent no.6 for not depositing taxes despite payment by the petitioner, the competent authority may consider revoking the cancellation of the petitioner's registration. The Court emphasized that conditions may be imposed for the revocation, and the matter was scheduled to be reviewed on 12th April 2023.