HP HC Orders Fresh Review of ITC Claim, Reasoned Order to

Key Takeaways from HP HC Order on ITC Claim Review

Recent developments in the Himachal Pradesh High Court have significant implications for businesses navigating the complexities of the Goods and Services Tax (GST) framework.

• The court directed the competent authority to reconsider the petitioner’s ITC claim based on fresh objections and supporting documents.
• The authority must specifically examine the genuineness of transactions, validity of documents, timing of purchases, and compliance with statutory obligations.
• The court ordered the petitioner to file objections within 28 days, after which the authority must pass a reasoned order within six weeks.
• The ruling emphasizes the importance of procedural fairness and the requirement for authorities to consider taxpayer submissions before deciding ITC claims.

This development is crucial for businesses seeking to clarify their ITC entitlements and ensure compliance with GST regulations. Readers should be aware of the court’s emphasis on procedural fairness and the need for authorities to carefully consider taxpayer submissions.

The Himachal Pradesh High Court in Vardhman Ispat Udyog Vs Union of India & Ors. dealt with a dispute concerning denial of input tax credit (ITC) and challenge to show cause notices issued under the GST framework. The petitioner initially sought to declare Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 unconstitutional but later chose not to press this relief, reserving the right to challenge it separately. The core grievance was that despite submitting detailed replies with supporting documents, the authorities issued summary show cause notices without proper consideration of the petitioner’s submissions.

The petitioner requested that the matter be reconsidered based on documents proving that payments, including GST, were made to suppliers, transactions were genuine, and purchases occurred prior to cancellation of the supplier’s registration. The Court noted the submissions and directed that if fresh objections along with supporting documents are filed, the competent authority must consider them afresh. The authority must specifically examine the genuineness of transactions, validity of documents, timing of purchases, and compliance with statutory obligations, including verification of supplier identity.

The Court disposed of the petition by directing the petitioner to file objections within 28 days, after which the authority must pass a reasoned order within six weeks. If no objections are filed, authorities may proceed as per law. The ruling emphasizes procedural fairness and the requirement for authorities to consider taxpayer submissions before deciding ITC claims.

FULL TEXT OF THE JUDGMENT/ORDER OF HIMACHAL PRADESH HIGH COURT

Petitioner has approached this Court seeking following main substantial relief(s):-

“i) Declare that Section 16(2)(c) of Central Goods & Services Tax Act, 2017 & Himachal Pradesh Goods & Services Act, 2017 is ultra virus the Constitution of India and CGST Act, 2017 being arbitrary, unreasonable, and violative of Article 14, 19(1)(g), 21 and 300A of the Constitution of India as well as contrary to intent & purport of the Central Goods & Services Tax Act, 2017; &

ii) Writ of certiorari quashing the summary of show cause notices dated 17.08.2021 (Annexure P-8 & P-9) whereby the respondent has raised the demand of tax, interest and penalty.”

2. Learned counsel for the petitioner submits that, at present, the petitioner does not press relief No. 1, reserving the right to agitate the issue in an appropriate petition, if so desired.

3. It has been further submitted that after issuance of summons dated 09.08.2021 (Annexure P-3) and intimation dated 09.08.2021 (Annexure P-4), the petitioner had submitted a detailed reply along with documents claiming entitlement to the benefit of input tax credit. However, without considering the same, further proceedings in the form of impugned summary show cause notices/detailed notices dated 17.08.2021 (Annexures P-8 and P-9) were issued, which have been assailed as relief No. 2 in the present petition.

4. It has been further submitted that the petitioner would be satisfied if the concerned authorities are directed to consider the claim/objections afresh alongwith documents filed/to be filed by or on behalf of the petitioner before the competent authority in response to the aforesaid summary show cause notices/detailed notices specifically dealing that whether payments on purchases in question, along with GST, were actually paid or not to the supplier (RTP) and whether the transactions and purchases in question are genuine and supported by valid documents, and whether transactions and purchase in question were made before or after the cancellation of the supplier’s registration, as well as compliance with statutory obligations by the petitioner regarding verification of the identity of the supplier (RTP).

5. It has been further submitted that, if upon consideration of the relevant documents, it is found that all purchases and transactions are genuine and supported by valid documents and were made prior to the cancellation of the supplier’s registration, the petitioner be granted the benefit of input tax credit in question.

6. Learned Advocate General submits that, in case the petitioner files a fresh response to the summary show cause notices/detailed notices before the competent authority along with relevant documents to substantiate the claim of petitioner, the competent authority shall decide the same within a reasonable time.

7. In view of the above, the present petition is disposed of by directing the competent authority to consider the objections along with documents, if so filed, within 28 days from today in response to the show cause notices/detailed notices dated 17.08.2021 (Annexures P-8 and P-9), by keeping in view the aforesaid submissions made by the petitioner and to pass an appropriate speaking and reasoned order thereupon within 06 weeks from the date of filing of such objections/response. In case no objections are filed within 28 days in response to the show cause notices/detailed notices, the competent authority shall proceed further in accordance with law, treating that the petitioner has nothing to say in response to the said notices.

Petition is disposed of in aforesaid terms along with pending applications, if any.

1 Whether the reporters of the local papers may be allowed to see the Judgment? Yes

Readers should treat this as a tax and compliance update, not as personal advice.

This article is for general information based on available source information. It should not be considered legal, tax, investment, or financial advice.