Difficulties Faced On Initial Phase Of GST Implementation, Kerala High Court Sets Aside Disallowance Of ITC

The Kerala High Court recently addressed the difficulties faced by small scale dealers during the initial phases of GST implementation in understanding the provisions of GST Act.

Justice Dinesh Kumar Singh set aside the orders of the assessing authority disallowing the input tax credit claims of the petitioners and observed thus,

“The period involved is 2017-18 when the GST regime was rolled out. There may be some substance in the submission of the learned Counsel for the petitioner that the petitioner faced enormous difficulty in understanding the provisions of the GST Act.”

The petitioners filed monthly returns for GSTR 3B for the Assessment Year 2017-18. Noting certain discrepancies, the respondents issued notice to the petitioners and they were directed to submit their explanation within a period of thirty days. Thereafter, they were issued with show cause notices for failing to produce any evidence to show that they have remitted tax and interest. Since, they did not receive explanation, the assessing authority disallowed the input tax credit claims and they were directed to remit huge amounts including tax, interest and penalty.

The Counsel for the petitioner submitted that small dealers like the petitioner were facing a lot of difficulties in the initial period of the implementation of the GST regime. It was argued that the petitioner has documents for proving that he was eligible for claiming input tax credit.

The counsel for the respondents argued that the petitioner was issued with notice and he was also given opportunities for supporting his claims. It was submitted that the assessing authorities have complied with the provisions of law and the principle of natural justice.

The Court further directed the State Tax Officer to reconsider the claims after examining the evidences submitted by the petitioners and after affording an opportunity of hearing to him.

“The petitioner is directed to appear before the State Tax Officer, Kayamkulam, with all the relevant documents in his possession to support his claim for the input tax credit of an amount…… for the Assessment Year 2017-18. The State Tax Officer, Kayamkulam, will, after examining the documents and hearing the petitioner, pass fresh orders in accordance with the law within a period of two weeks thereafter.”

The Court disposed of the writ petitions on the above observations.

Counsel for the Petitioner: Advocates K.N.Sreekumaran

P.J.Anilkumar, N.Santhoshkumar

Counsel for the respondents: Government Pleader Reshmita Ramachandran

Citation: 2023 LiveLaw (Ker) 548

Case title: Anaz Abdul Rahiman Kutty v State Tax Officer

Case number: WP(C) Nos.31056/2023, 31026/2023

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