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2024 (3) TMI 1268 - HC - GSTReversal of ineligible ITC under Section 74 of CGST Act 2017 - mismatch between GSTR-2A and GSTR-3B submitted by the petitioner for the period 01.09.2023 till 13.09.2023 - HELD THAT - Whether the transactions were bona fide or not and whether the selling dealer i.e. respondent No. 4 whose registration has been subsequently cancelled is responsible for non-deposit of tax leading to availment of ineligible ITC by the petitioner is not to be gone into by this Court at this stage. The scheme of the GST Act contemplates a pre-adjudication notice for which intimation under Section 74(5) of the Act of 2017 is issued in Form GST DRC-01A read with Rule 142(1A) upon the assessee/taxpayer containing the communication of details of any tax interest and penalty chargeable upon the person under sub-section (1) of Section 73 or sub-section (1) of Section 74. This intimation is in Part A of Form GST DRC-01A. Petitioner has not enclosed any notice indicating initiation of proceedings under Section 74(1) for wrongful availment of ITC by the proper officer if the petitioner has not paid or short paid or erroneously refunded or wrongly availed ITC or utilized it by reason of fraud or any wilful-misstatement or suppression of facts to evade tax - as per the scheme of Section 74(1) particularly provisions of Section 74(5) read with Rule 142 (1A) and 142 (2A) petitioner being the person referred to in the impugned notice is required to either make partial payment of the amount communicated to him or if he desires to file any submission or objection against the proposed liability he may do so in Part B of Form GST DRC-01A. This Court is of the considered view that petitioner may either make the necessary deposit or reverse the ineligible ITC along with interest and penalty or file his objection(s) in Part B of Form GST DRC-01A - Petition disposed off.
Issues involved:
The judgment addresses the issue of a notice served to the petitioner to pay/reverse ineligible ITC under Section 74 of the CGST Act, 2017 due to a mismatch between GSTR-2A and GSTR-3B. The petitioner, a trading rubber products dealer, challenges the notice claiming to have availed ITC in good faith based on transactions with a selling dealer whose GST registration has been cancelled. Details of the judgment: The petitioner, with GSTIN 16ABOFS6236K1ZM, received a notice on 26.02.2024 to pay/reverse ineligible ITC under Section 74 of the CGST Act, 2017 for a mismatch between GSTR-2A and GSTR-3B submitted for the period 01.09.2023 till 13.09.2023. The petitioner contended that the notice was issued because the selling dealer did not deposit the tax paid by the petitioner, leading to the cancellation of the selling dealer's GST registration. The petitioner, a bonafide purchasing dealer, claimed ITC believing the selling dealer had paid the tax dues. The petitioner's senior counsel cited judgments to support the maintainability of the writ petition to examine the validity of the notice for reversing ITC along with interest and penalty. The respondent's counsel argued that the notice was an intimation under Section 74(5) to allow the petitioner to deposit or reverse ineligible ITC before formal proceedings under Section 74(1) are initiated for fraudulently availing inadmissible ITC. The court considered submissions from both parties, reviewed the relevant provisions of the CGST Act, and examined previous judgments. The court clarified that at this stage, it would not determine the bona fides of the transactions or the responsibility of the selling dealer for non-deposit of tax leading to the petitioner's ineligible ITC. The court emphasized the pre-adjudication notice under Section 74(5) and Rule 142(1A) issued to the petitioner for reversing ineligible ITC before formal proceedings under Section 74(1) are initiated. The court directed the petitioner to either make the necessary deposit or reverse the ineligible ITC with interest and penalty or file objections in Part B of Form GST DRC-01A. The adjudicating officer would then examine the objections before initiating proceedings under Section 74(1), considering relevant documents and potentially involving the selling dealer in resolving the dispute. In conclusion, the court disposed of the writ petition, stating that pending applications would also be disposed of accordingly.
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