2024 (7) TMI 527 - HC - GST

Maintainability of petition - availability of alternative remedy - demand on account of Input Tax Credit (ITC) being availed by the petitioner no. 1 - HELD THAT - Having regard to the case made out by the petitioners, the writ petition should be heard. Further considering the prima facie case made out by the petitioners there shall be a stay of the demand raised by the proper officer as is reflected in the order dated 30th March, 2024, subject to the petitioners depositing 10% of the disputed tax amount with the GST authorities. Such payment must be made within a period of seven days from date. Let this matter appear in the Combined Monthly List of July, 2024 and be taken up for consideration on 23rd July, 2024.

Summary

Issues:
Challenge to order under Section 73 (9) of the West Bengal/Central Goods and Services Tax Act, 2017 regarding Input Tax Credit (ITC) availed by petitioner, compliance of M/s. Crystolyte Facility Management Pvt. Ltd., interpretation of Ministry of Finance press release, legality of recovery process, request for stay of order, alternative remedy through appeal.

Analysis:
The writ petition challenges an order under Section 73 (9) of the GST Act, raising a demand on the petitioner for availing Input Tax Credit (ITC) in violation of Section 16 (2) (a) of the Act due to M/s. Crystolyte Facility Management Pvt. Ltd., with whom the petitioner had an agreement, closing down its business. The petitioners submitted a supplementary affidavit showing compliance by M/s. Crystolyte Facility Management Pvt. Ltd. until 2018-19, indicating no recovery action against them. The petitioners argue that recovery from them is contrary to law, citing a Division Bench case precedent. The Ministry of Finance's press release is interpreted to support that recovery from buyers is an option only in exceptional situations, which is contested by the respondents.

The petitioner seeks to set aside the order as baseless and requests a stay. The respondents argue for the petitioners to exhaust the appeal remedy before pursuing the writ petition. The Court, after hearing both sides, decides to hear the writ petition, granting a stay on the demand subject to the petitioners depositing 10% of the disputed tax amount with GST authorities within seven days. The interim order is to be in effect until the end of July 2024 or until further notice, with the matter scheduled for consideration in July 2024.

In summary, the judgment addresses the legality of the demand raised on the petitioner for ITC availed, considering compliance by the supplier, interpretation of the Ministry of Finance's guidelines, and the appropriateness of recovery actions. The Court allows the writ petition to proceed, granting a stay on the demand subject to a deposit by the petitioner, emphasizing the need for compliance with the payment condition for the stay to remain effective.