2024 (2) TMI 589 - HC - GST

Reversal of ITC - petitioner has not submitted the supporting evidence like debit entries in Electronic Credit Ledger / Books of Accounts - HELD THAT - The coordinate bench of this Court in the case of Hindustan Unilever Ltd. 2023 (9) TMI 998 - RAJASTHAN HIGH COURT inter alia on the aspect of issue involved which is similar to present writ petitions, where the coordinate bench was of the opinion that the provision was being questioned on the ground of workability/difficulty in collecting certificate/proof from the recipient regarding reversal of ITC and, therefore, called upon the Union of India to place before it appropriate suggested mechanism. Subsequent thereto, on two occasions time has been granted, however, the mechanism is yet to be placed before the Court. In view of the observations of coordinate bench of this Court, which, while elaborately hearing the present writ petitions, this Court also felt about the issue being that of lack of/providing a mechanism with regard to the subject matter of the demand raised and sought to be disputed by the petitioner only. In that view of the matter, following the observations made in the case of Hindustan Unilever Ltd.(supra), wherein, interim order was not granted by the coordinate bench and the learned ASG was directed to place before the Court appropriate suggested mechanism, issue notice of the writ petition to the respondents - As the respondent no.1 is represented by learned ASG, notice be issued to respondent nos. 2, 3 4, returnable on 22/1/2024.

Summary

Issues involved:
The petitions challenge the Orders in Original dated 30/10/2023 and 31/10/2023, claiming various reliefs including questioning the validity of Section 15(3)(b)(ii) of the Central Goods and Services Tax Act, 2017, seeking direction for the appellate authority to hear the appeal without pre-deposit, and requesting a stay on the operation of the impugned orders.

Details of the Judgment:

Validity of Section 15(3)(b)(ii) of the CGST Act:
The petitioner contested the validity of Section 15(3)(b)(ii) of the CGST Act, arguing that the mechanism for matching credit notes with the reversal of Input Tax Credit (ITC) by recipients was not functional, leading to the imposition of tax demand. The petitioner highlighted the omission of Section 43 of the Act, which previously mandated the matching exercise. The Court noted the difficulty faced by the petitioner in collecting proof of ITC reversal by recipients and directed the Union of India to propose a suitable mechanism.

Appellate Authority's Consideration:
The Court emphasized that the adequacy of material regarding ITC reversal should be examined by the appellate authority. The petitioner's challenge to the authority's decision on ITC reversal and the inability to provide evidence can be addressed through a statutory appeal. The Court referenced a similar case involving Hindustan Unilever Ltd., where no interim order was granted, and directed the ASG to propose a mechanism for resolving such issues.

Court's Decision and Directions:
In line with the observations from the Hindustan Unilever Ltd. case, the Court refrained from granting an interim order and issued notice to the respondents, requiring them to respond to the petition. The ASG representing the Union of India was directed to present a suggested mechanism promptly. The Court stressed the need for compliance with previous directions, indicating the importance of expeditiously resolving the issues raised in the petition.

Conclusion:
The judgment addresses the challenges raised by the petitioner regarding the validity of statutory provisions, the necessity of providing evidence for ITC reversal, and the role of the appellate authority in assessing such matters. The Court's decision underscores the importance of statutory processes and the need for a functional mechanism to address tax-related disputes effectively.