2024 (10) TMI 1384 - HC - GST

Challenge to SCN demanding input tax credit availed by the Petitioner - IGST paid on manpower supply services received by the petitioner - erroneous invocation of Section 74 of the CGST Act, 2017 / KGST Act, 2017 - HELD THAT - A perusal of the material on record and the submissions made by both sides will clearly indicate that prior to issuance of the impugned Show Cause Notice dated 28.09.2023 at Annexure A, the State GST Authorities had already initiated proceedings as against the petitioner proposing to demand IGST and consequently, in light of Section 6(2)(b) of the CGST Act, 2017, which contemplates a complete bar / embargo on the Central GST Authorities to initiate proceedings in a situation where the State GST Authorities had already initiate proceedings as against the petitioner on the same subject matter, the impugned Show Cause Notice at Annexure A to extent of demand of IGST of Rs.1,68,04,057/- along with interest in the light of Section 6(2)(b) of the CGST Act, 2017 deserves to be quashed. Denial of input tax credit on the alleged violation of Section 16(4) of the CGST Act, 2017 - HELD THAT - The issue is covered by the judgment of this Court in the case of Bosch Limited Vs. State of Karnataka and others 2024 (9) TMI 496 - KARNATAKA HIGH COURT and M/S. MUSASHI AUTO PARTS INDIA PVT. LTD. VERSUS STATE OF KARNATAKA BENGALURU, DEPUTY COMMISSIONER OF COMMERCIAL TAXES, BENGALURU 2024 (7) TMI 1545 - KARNATAKA HIGH COURT and the Circular No. 211/5/2024-GST dated 26.06.2024 issued by the Central Board of Indirect Taxes and Customs, New Delhi. The input tax credit has been validly availed. It is deemed just and appropriate to dispose of this petition by issuing certain directions - the impugned Show Cause Notice at Annexure A dated 28.09.2023 issued by the Respondent No. 3 to the extent of demand of IGST of Rs.1,68,04,057/- along with interest in terms of Section 6(2)(b) of the CGST Act, 2017 is hereby quashed - petition disposed off.

Summary

Issues:
1. Quashing of Show Cause Notice demanding input tax credit availed by the Petitioner.
2. Validity of input tax credit availed by the Petitioner.
3. Jurisdiction of Central GST Authorities in issuing the impugned Show Cause Notice.
4. Admissibility of interest on the demands made by the Respondents.

Analysis:

1. The petitioner sought the quashing of the Show Cause Notice demanding input tax credit availed, arguing that the demand was illegal, arbitrary, and opposed to statutory provisions. The petitioner contended that the proceedings were initiated by State GST Authorities first, leading to a bar on Central GST Authorities from initiating similar proceedings. The Court agreed and quashed the demand of IGST along with interest, citing Section 6(2)(b) of the CGST Act, 2017.

2. Regarding the validity of input tax credit, the petitioner argued that it was rightfully availed based on Circular No. 211/5/2024-GST and relevant court judgments. The Court referenced previous judgments and the circular, concluding that the input tax credit was validly availed, thereby dismissing the allegations of violation of Section 16(4) of the CGST Act, 2017.

3. The jurisdiction of Central GST Authorities in issuing the impugned Show Cause Notice was challenged by the petitioner, highlighting that State GST Authorities had already initiated proceedings on the same matter. The Court concurred, stating that the Central GST Authorities were barred from proceeding when State GST Authorities had already initiated action, leading to the quashing of the impugned Show Cause Notice for IGST demand.

4. Lastly, the issue of the admissibility of interest on the demands made by the Respondents was raised. The petitioner argued that the demand for interest was not sustainable under specific provisions of the CGST Act. The Court did not provide a specific ruling on this issue but directed the respondents to consider the petitioner's reply and documents, proceeding in accordance with the law and relevant provisions within a specified timeframe.

In conclusion, the Court disposed of the petition, quashing the demand for IGST along with interest and allowing the petitioner to respond to the remaining demand for input tax credit. The respondents were instructed to consider the petitioner's submissions and pass appropriate orders within a stipulated period, taking into account all relevant legal aspects and contentions presented.