2020 (7) TMI 479 - HC - GST

Utilization of Input Tax credit - cancellation of debit entries in the Petitioner s Electronic Credit Ledger maintained under the CGST Act - HELD THAT - The petitioner has not approached the respondents at any point of time making such a request. He also does not dispute that the investigation which is going on can continue for further period of 18 months approximately and he also does not dispute the provision of Section 76 and 76(2) which is on a statute book reflecting the liabilities of taxes of the parties. Relying on various decisions, it is urged that without following the procedure prescribed under the statute and without any taxing event having taken place, no recovery is permissible. Issue Notice returnable on 24.7.2020.

Summary

Issues:
Petition under Articles 14, 19(1)(g), 265 and 300(A) of the Constitution challenging DRC-03 Forms for cancellation of debit entries and seeking direction to allow credit of Input Tax Credit.

Analysis:

1. The petitioners filed a petition challenging the DRC-03 Forms dated 09.04.2019, seeking the cancellation of debit entries in their Electronic Credit Ledger under the CGST Act. The prayers included issuing a Writ of Mandamus to quash the forms and allow credit of Input Tax Credit amounting to ?7,65,00,000 for paying GST on manufactured goods. The petition also requested interim relief and any other appropriate relief deemed fit by the court.

2. During the hearing, the counsel for the petitioners argued that despite the voluntary deposit of ?7,65,00,000 by the petitioner, they should be permitted to utilize the Input Tax Credit, especially considering the adverse impact of the COVID-19 pandemic on their business operations. It was acknowledged that the petitioner had not formally requested the respondents for such permission. The counsel highlighted the need for the respondents to allow the use of ITC without a taxing event having occurred, citing legal provisions and precedents to support the argument.

3. The counsel for the petitioners emphasized the importance of following the prescribed statutory procedures and contended that recovery should not be permitted without a proper taxing event. It was noted that an ongoing investigation could extend for approximately 18 months, and the liabilities of the parties were governed by Section 76 and 76(2) of the statute. The argument underscored the necessity of adhering to legal procedures before enforcing recovery actions without a valid basis.

4. The court issued a notice returnable on 24.7.2020, indicating that the matter would be further examined at a later date. This step signifies the court's acknowledgment of the petition and its intention to delve deeper into the legal aspects and arguments presented by both parties.

5. Additionally, the court permitted service by e-mode to all the respondents, ensuring that the necessary communication and legal procedures would be followed efficiently and effectively in the case. This step aligns with modern practices of utilizing electronic means for legal notifications and updates, streamlining the process for all involved parties.