Andhra Pradesh High Court Dismisses Plea Challenging Denial Of GST ITC Claim On The Basis Of Transfer Done Manually Not Electronically

The Andhra Pradesh High Court has dismissed the plea challenging the denial of the GST input tax credit (ITC) claim on the basis that the transfer was done manually, not electronically.

The bench of Justice Ravi Nath Tilhari and Justice A V Ravindra Babu has observed that the petitioner’s plea to read down the provisions of Rule 41 of the CGST Rules and to direct to accept the manual filing deserves rejection, as neither Rule 41 of the CGST Rules is under challenge nor is shown to be contrary to any provision of the CGST Act, and particularly when the petitioner has the opportunity before the Authority pursuant to the show cause notice to justify manual filing.

The petitioner/assessee is a company registered under the Companies Act, 1956, and is, inter alia, engaged in providing internet services across India from various states, including the State of Andhra Pradesh. The Deputy Assistant Commissioner, State Taxes, issued a show cause notice in GST DRC-01, dated September 29, 2023.

The notice was issued in view of the fact that the respondent concluded that the petitioner claimed ITC for Rs. 31,81,529 in contravention of the provisions of Section 16 of the APGST Act 2017. Therefore, it was proposed to levy Rs. 31,81,529 towards the excess claim of input tax more than the eligibility as per the provisions of the APGST Act 2017. It was also proposed that the petitioner be liable to pay Rs. 38,46,389 towards the discrepancies identified in the said notice.

The petitioner was also informed that he was liable to pay interest under Section 50 of the GST Act 2017 towards the short payment of taxes. By the show cause notice, the petitioner has been granted the opportunity to file objections, if any, along with the documentary evidence, within a specified time from the date of receipt of the notice, which further provides that, failing which, orders deemed fit would be passed without further notice or time. The petitioner has also been provided with the opportunity to express their desire to be represented personally on the date fixed under prior notification.

The Assistant Commissioner issued notice GST ASMT-10 intimating the discrepancy in the return after scrutiny (scrutiny notice) and calling for an explanation for such a discrepancy. The petitioner submitted the reply or explanation. On consideration of the petitioner’s reply, the show cause notice has been issued, granting the opportunity to file objections along with documentary evidence and also providing a personal hearing if so desired.

The department contended that the petitioner has the opportunity to submit the explanation, to present the evidence before the department, and also to avail themselves of the opportunity of a personal hearing. It is only after the petitioner avails itself of such an opportunity that the petitioner can challenge the same in appropriate proceedings under statutory provisions. But bypassing the procedure and the remedy, a writ petition filed directly to challenge the show cause notice would not be maintainable.

The petitioner contended that it filed, manually and not electronically, the Form GST-ITC 02, as provided by Section 18(3) of the CGST Act, read with Rule 41 of the CGST Rules. The respondent would not consider such filing and would hold that the petitioner would not be entitled to an ITC claim. Consequently, approaching the respondent with the objections and the evidence would be futile.

The court, while dismissing the petition, held that the period granted to the petitioner to file the objections and appear before the authority concerned has already expired.

“We provide that if the petitioner files objections with evidence and shows his willingness for personal hearing, within a period of one week from the date of receipt of a copy of this order to the authority concerned, the same shall be considered and decided, as expeditiously as possible, preferably within 4 weeks from the date of receipt of a copy of this order, in accordance with law,” the court said.

Counsel For Petitioner: Kalepu Yashwanth

Counsel For Respondent: S A V Saikumar

Case Title: Tikona Infinet Private Limited Versus The State of Andhra Pradesh

Case No.: Writ Petition No. 28743 Of 2023

Click Here To Read The Order