2024 (4) TMI 411 - HC - GST

Disallowance of input tax credit received from the ISD - petitioner not file GSTR Form-6 - provisions of sub-section (7) of Section 140 of CGST Act - HELD THAT - As per the Rule 36 of the CGST Rules, the petitioner has received the invoice of distribution of the input tax credit of its ISD and therefore the petitioner is entitled to such input tax credit. Considering the submissions, issue Notice returnable on 1st May, 2024. In the meanwhile, no coercive action shall be taken by the respondent authority during the pendency of this petition. Direct service is permitted through e-mail.

Summary

Issues Involved:
The issues involved in the judgment are related to the utilization of input tax credit received from an input service distributor (ISD) under Section 140(7) of the Central Goods and Service Tax Act, 2017 (CGST Act). The petitioner was not allowed to utilize the input tax credit due to the ISD's inability to file GSTR Form-6 for carry forward of transitional credit.

Summary:
The petitioner's advocate argued that the respondent authorities had not permitted the petitioner to utilize the input tax credit received from its ISD due to the ISD's failure to file GSTR Form-6 for carry forward of transitional credit under Section 140(7) of the CGST Act. The advocate highlighted that the ISD could not file GSTR Form-6 as there was no provision for carry forward of transitional credit in the form.

Moreover, reference was made to a letter from the ISD of the petitioner addressing the issue of inability to file GSTR Form-6 with the respondent authorities. The petitioner's advocate also mentioned a case in the Punjab and Haryana High Court where a show cause notice challenging the disallowance of transitional input tax credit under Section 140(7) of the CGST Act was stayed pending further proceedings.

Additionally, the advocate referred to a case in the Bombay High Court regarding the carry forward of transitional credit by an ISD under Section 140(7) of the CGST Act, which was adjourned awaiting recommendations from the GST Council. The petitioner's advocate argued that as per Rule 36 of the CGST Rules, the petitioner had received the invoice for the distribution of input tax credit from its ISD and was entitled to utilize the credit amounting to Rs. 1,12,13,823.

In light of the submissions, the court issued a Notice returnable on 1st May, 2024, and directed that no coercive action be taken by the respondent authority during the pendency of the petition, allowing direct service through e-mail.