2024 (6) TMI 1381 - HC - GST

Challenge to assessment order - reversal of Input Tax Credit in respect of credit notes issued by the supplier - HELD THAT - Sub-section (3) of Section 15 of applicable GST statutes provides for a reduction in the value of supply, on account of a discount, if such discount has been duly recorded in the invoice issued in respect of such supply or if such discount is established in terms of an agreement entered into either before or at the time of supply although the supply may be subsequent to such agreement. In this case, the petitioner has prima facie established that neither of the requirements under sub-section (3) were satisfied. In such event, the supplier would be liable to pay tax on the full value of supply. The exercise of jurisdiction under Article 226 is discretionary and subject to self imposed fetters. One such fetter is when an efficacious alternative remedy is available. It should be borne in mind that the existence of an alternative remedy is a material consideration but not a bar to the exercise of jurisdiction. In the case at hand, on the basis that the other issues require reappraisal of evidence, the petitioner has approached the appellate authority in respect thereof - notwithstanding the fact that the petitioner had approached the appellate authority in respect of other issues, the jurisdiction is exercised. It is needless to say that a writ petition would not ordinarily be entertained once the person aggrieved has chosen to challenge other issues in an order before an appellate authority. The impugned order dated 12.03.2024 is set aside only insofar as defect no.3 relating to reversal of Input Tax Credit for the value of credit notes issued by the supplier is concerned - petition disposed off.

Summary

Issues:
Challenge to order in original dated 12.03.2024 regarding defect no.3 - Reversal of Input Tax Credit for credit notes issued by the supplier.

Analysis:
The petitioner contested defect no.3 in the order, which involved the reversal of Input Tax Credit for credit notes issued by the supplier. The petitioner argued that the credit notes were financial in nature and not subject to reversal, citing Section 15(3) of the GST statutes and Circular No.92/11/2019-GST. The petitioner contended that the discount offered by the supplier was mistakenly treated as a service provided by the purchaser, necessitating a review of the impugned order.

The respondent, represented by the Additional Government Pleader, highlighted that the petitioner had only challenged defect no.3 in the writ petition, while other defects were under appeal before the appellate authority. The respondent emphasized the importance of exhausting statutory remedies and discouraged piecemeal challenges to different defects in the same order.

The court examined Section 15(3) of the GST statutes, which allows a reduction in the value of supply for discounts properly recorded in invoices or established through pre-supply agreements. In this case, the court found that the petitioner had not met the requirements under Section 15(3), making the supplier liable for tax on the full value of supply.

Upon reviewing the impugned order, the court noted that the assessing officer incorrectly concluded that the petitioner was providing a service to the supplier by availing the discount, contrary to GST principles. The court deemed this conclusion erroneous and in need of reconsideration, leading to the setting aside of defect no.3 for reassessment by the original authority.

The court addressed the jurisdictional aspect, acknowledging the availability of alternative remedies but emphasizing the discretionary nature of Article 226 jurisdiction. Despite the petitioner pursuing other issues before the appellate authority, the court chose to intervene due to the pure legal nature of the issue and the appellate authority's lack of power to remand in such cases.

In conclusion, the court set aside the impugned order only concerning defect no.3 and remanded it for re-evaluation by the original authority. The assessing officer was directed to issue a fresh order within three months, providing the petitioner with a reasonable opportunity, including a personal hearing. The writ petition was disposed of accordingly, with no costs imposed, and related motions were closed.