2024 (8) TMI 1311 - HC - GST

Invocation of provision of section 16 (2) (c) of the GST Act - respondent-Authority has not taken into consideration the detailed reply filed by the petitioner while arriving at a conclusion - It was submitted that there is a prima facie case in favour of the petitioner as the respondent-authorities could not have invoked the provision of section 16 (2) (c) of the GST Act - HELD THAT - The petitioner has made out a strong prima facie case to grant interim relief and therefore, the impugned order dated 27.10.2023 passed under section 74 of the GST Act is hereby stayed during the pendency of the petition on the condition of depositing Rs. 20 Lakh by the petitioner with the GST authority within a period of two weeks from today. Application disposed off.

Summary

Issues:
1. Interpretation of section 16 (2) (c) of the GST Act in relation to the passing of an impugned order.
2. Consideration of detailed reply by the respondent-Authority in arriving at a conclusion.
3. Liability of the petitioner for GST payment on goods purchased from suppliers with cancelled registrations.
4. Ignoring directions and guidelines issued by the GST Council for invoking section 16 (2) (c) of the GST Act.
5. Prima facie case for granting interim relief to the petitioner against the impugned order under section 74 of the GST Act.

Analysis:
The judgment delivered by the High Court involved a Special Civil Application challenging an order passed under section 74 of the GST Act. The petitioner contended that the respondent-Authority did not consider the detailed reply filed, which raised concerns about the applicability of section 16 (2) (c) of the GST Act. The petitioner argued that since the goods were received from suppliers with cancelled registrations, they should not be liable to pay GST included in the invoices. Additionally, the petitioner highlighted that the acknowledgment of goods delivery and payment through banking channels were not disputed in the impugned order. The Court noted that the respondent-Authority failed to provide reasons for disregarding the petitioner's contentions and did not establish why the reply was deemed unacceptable for invoking section 16 (2) (c) of the GST Act.

Furthermore, the petitioner pointed out that the respondent-Authorities overlooked the guidelines issued by the GST Council for invoking the mentioned provision. The Court acknowledged the petitioner's argument that the suppliers had appealed against the cancellation of their registration numbers retroactively, indicating a lack of conclusive findings in the impugned order regarding the unavailability of the supplier. Consequently, the Court found a strong prima facie case in favor of the petitioner and granted interim relief by staying the impugned order under section 74 of the GST Act. The Court imposed a condition for the petitioner to deposit a specified amount with the GST authority within a stipulated timeframe to secure the stay order. Ultimately, both Civil Applications were disposed of based on the Court's findings and the relief granted to the petitioner.