2024 (7) TMI 1545 - HC - GST

Eligibility to claim IGST Input Tax Credit (ITC) for the period July 2017 to March 2023 - delay in taking credit beyond the stipulated period as contemplated under Section 16(4) of the CGST Act, 2017 - HELD THAT - The petitioner would be entitled to availment of ITC and cannot be deprived of the same or fastened with liability to pay interest on account of his claim having been filed belatedly as can be seen from the circular No.211/5/2024-GST, dated 26.06.2024. The aforesaid circular completely supports the claim of the petitioner especially in the light of the judgment of the Apex Court in the K.P.VARGHESE Vs. INCOME TAX OFFICE, ERNAKULAM, AIR 1981 SC 1922 to the effect that a CBIC circular is binding upon the respondents. However, since the said circular was issued during the pendency of the present petition and the respondents did not have the benefit of the said circular at the time of issuance of the Show Cause Notice, it is deemed just and appropriate to dispose of this petition and direct respondent No.2 to consider the objections to be filed by the petitioner and proceed further in accordance with law, bearing in mind the aforesaid circular and take appropriate decisions/pass appropriate orders in accordance with law. The petition stands disposed of.

Summary

Issues:
Petitioner seeking writ of Certiorari to quash Show Cause Notice, eligibility to claim IGST Input Tax Credit, interpretation of Section 16(4) of CGST Act, reliance on CBIC circular, premature filing of petition, direction to consider objections, binding nature of CBIC circular.

Analysis:

1. The petitioner sought a writ to quash the impugned Show Cause Notice issued by respondent No.2, challenging the denial of IGST Input Tax Credit (ITC) due to a perceived delay in claiming credit beyond the stipulated period under Section 16(4) of the CGST Act, 2017. The petitioner argued that a subsequent circular issued by the CBIC clarified that there was no delay in availing ITC, especially when self-invoices were issued within the prescribed timeframe. The petitioner contended that the Show Cause Notice should be quashed in light of the clarifications provided by the CBIC circular.

2. The learned AGA acknowledged the clarifications provided in the CBIC circular, agreeing that the petitioner's position regarding ITC availment had been addressed. However, the AGA argued that the petition was premature, suggesting that the petitioner should respond to the Show Cause Notice first. The AGA proposed that if the petitioner submits a reply to the Notice, respondent No.2 could consider the response and proceed accordingly under the law.

3. The Court examined the CBIC circular, which emphasized the linkage between the time limit for ITC availment and the financial year of the invoice or debit note. The circular clarified that in cases of supplies from unregistered suppliers where the recipient issues the invoice under RCM, the relevant financial year for ITC availment would be the year of invoice issuance. The circular also highlighted the consequences of delayed invoice issuance, including interest payments and potential penal actions.

4. The Court concluded that the petitioner was entitled to avail ITC based on the CBIC circular, which was deemed binding on the respondents. Despite the circular being issued after the Show Cause Notice, the Court directed respondent No.2 to consider the petitioner's objections and make decisions in accordance with the circular and the law. The Court allowed the petitioner to file objections within three weeks for further consideration by respondent No.2.

5. The judgment emphasized the importance of the CBIC circular in clarifying the petitioner's entitlement to ITC and the procedural steps to be followed by respondent No.2. The Court's decision to dispose of the petition while directing respondent No.2 to consider the objections within the framework of the circular and the law demonstrates a balanced approach to resolving the dispute and ensuring procedural fairness for the petitioner.