2024 (9) TMI 496 - HC - GST

Challenge to SCN - availment of ITC in respect of the manpower supply services received by the Petitioner during the period 2017-18 to 2022-23 - circular No. 211/5/2024-GST, dated 26.06.2024 - 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. The circular completely supports the claim of the petitioner especially in the light of the judgment of the Apex Court in the KP VARGHESE VERSUS INCOME-TAX OFFICER, ERNAKULAM, AND ANOTHER 1981 (9) TMI 1 - SUPREME COURT 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. Liberty is reserved in favour of the petitioner to file his objections to the impugned Show Cause Notice within a period of three weeks, which shall be considered by respondent No. 2, who shall proceed further bearing in mind the observations made in this order and circular No. 211/5/2024-GST, dated 26.06.2024.

Summary

Issues:
Challenge to Show Cause Notice for input tax credit availed, interpretation of Section 16 (4) of CGST Act, reliance on CBIC circular, premature petition, directions for further proceedings.

Analysis:

The petitioner sought relief through a writ to quash the Show Cause Notice demanding input tax credit availed, arguing that the claim was not belated as clarified by a subsequent CBIC circular. The petitioner highlighted that the circular clarified the timing of ITC availment in cases of RCM supplies from unregistered suppliers, emphasizing that the financial year of invoice issuance determines the time limit for ITC claim, not the time of supply. The petitioner contended that the circular supported their claim and should invalidate the Show Cause Notice.

The learned AGA acknowledged the impact of the CBIC circular on the ITC claim timing but deemed the petition premature. It was suggested that the petitioner should respond to the Show Cause Notice, allowing respondent No. 2 to consider the objections and proceed lawfully. The Court noted the relevance of the circular in supporting the petitioner's ITC claim and the binding nature of CBIC circulars as per legal precedent.

Considering the timing of the CBIC circular issuance during the petition pendency, the Court deemed it just to direct respondent No. 2 to review the petitioner's objections in light of the circular. The Court instructed respondent No. 2 to make decisions in accordance with the law and the circular, ensuring the petitioner's rights to file objections within three weeks. The Court disposed of the petition with directions for further proceedings based on the circular and the petitioner's objections, maintaining fairness and adherence to legal principles.