2023 (12) TMI 1051 - HC - GST

Belated claim of Input Tax Credit (ITC) - purchase of Petroleum product - contention of the petitioner is that as per Section 38 of the GST Act read with Rule 60 of the TNGST Rules, the ITC shall be claimed through GSTR-2, GSTN had not provided the facility of GSTR-2 till now. HELD THAT - The respondents without giving any opportunity to file the returns by notifying the Form GSTR-2, cannot expect the taxable person to file returns. In fact, the petitioner has no intension to violate the provisions of the Act. In order to show his bonafide, he has filed physically. Moreover, all tax liability is paid and there is no loss to the department. Moreover, the petitioner has also claimed financial crisis. Even though the financial crisis cannot be a ground for not filing the returns in time, not notifying of Form GSTR-2 is clearly a ground to consider the petitioner's claim of belated returns. The next contention of the petitioner is that the ITC can be claimed through GSTR-3B, but GSTN has not permitted to file GSTR-3B in online if the dealers had not paid taxes on the outward supply / sales. In other words, if the dealer is not enabled to pay output tax, he is not permitted to file GSTR-3B return in online and it is indirectly obstructing the dealer to claim ITC. In the present case the petitioner was unable to pay output taxes and so the GSTN not permitted to file GSTR-3B in the departmental web portal it is constructed that the petitioner had not filed GSTR-3B online, that resulted the dealer unable to claim his ITC in that particular year in which he paid taxes in his purchases. Hence if the GSTN provided option for filing GSTN without payment of tax or incomplete GSTR-3B, the dealer would be eligible for claiming of input tax credit - The petitioner had expressed real practical difficulty. The GST Council may be the appropriate authority but the respondents ought to take steps to rectify the same. Until then the respondents ought to allow the dealers to file returns manually. This Court is inclined to quash the impugned orders and accordingly the impugned orders are quashed. The respondents shall permit the petitioner to file manual returns whenever the petitioner is claiming ITC on the outward supply / sales without paying taxes - the matter is remitted back to the authorities for reconsideration - Petition allowed.

Summary

Issues involved:
The issues involve the quashing of impugned orders related to belated claim of Input Tax Credit (ITC) for the financial years 2017-2018 and 2018-2019, based on the scrutiny of GSTR-3B returns filed by the petitioner, and the contention that the filing of GSTR-3B is not meant for claiming ITC.

Details of Judgment:

Issue 1: Alleged belated claim of Input Tax Credit (ITC)
The petitioner, engaged in the business of Petroleum Gases, contested the notice issued by the respondent department regarding the belated claim of ITC on the purchase of Petroleum products. The petitioner argued that the filing of GSTR-3B is not intended for claiming ITC and that the specific Form GSTR-2, meant for claiming ITC, was not notified. The petitioner maintained that the claim of belated ITC was false and misleading, as all tax liabilities were duly paid and accounted for.

Issue 2: Legal procedures and notifications
The petitioner highlighted the absence of Form GSTR-2 for claiming ITC, as per Rule 60 of the TNGST Rules, and the technical constraints preventing electronic filing due to the unavailability of the prescribed form. The petitioner emphasized that without the requisite forms being notified, the taxable person cannot be expected to file returns electronically, and the initiation of proceedings based on this was deemed unsustainable.

Issue 3: Judicial Precedents and Enabling Mechanisms
Citing judicial precedents from other High Courts, the petitioner argued for the allowance of manual filing of returns in cases where electronic filing was not feasible due to technical issues. The petitioner emphasized the need for an enabling mechanism to prevent genuine taxpayers from being prejudiced by the unavailability of necessary forms for claiming ITC.

Judgment Outcome:
The High Court, after considering the arguments presented, quashed the impugned orders and directed the respondents to permit the petitioner to file manual returns for claiming ITC on outward supplies without paying taxes. The Court stressed the importance of enabling mechanisms to facilitate the legitimate claiming of ITC by taxpayers, and remitted the matter back to the authorities for reconsideration in accordance with the law.

Conclusion:
The writ petitions were allowed, with no costs incurred by either party, and the connected miscellaneous petitions were closed, emphasizing the need for procedural fairness and enabling mechanisms in tax-related matters.