Gauhati HC Halts Show Cause Notice U/S 73(1) for ITC Reversal Due to Supplier’s Default

The Gauhati High Court has granted the interim stay of Show Cause Notice for the matter of Surya Business Private Limited, asking for the reversal of GST ITC on account of default at the supplier’s end.

The bench of Justice Manish Choudhury has noted that the plea contesting the Show Cause Notice pursuing reversal of ITC requires further examination and rendered that the council shall not act upon the Show Cause Notice till the subsequent listing date.

The applicant has contested a Show Cause Notice issued under Section 73(1) read with Section 50 of the Assam GST Act, 2017. The show cause notice called up the applicant to show cause within 30 days from the date of receipt of the show cause notice as to why a GST amount should not be recovered from the applicant, being the input tax credit (ITC) excess availed for the period 2018–2019 including the interest and penalty. The SCN has been assailed by the applicant on the foundation that the applicant has claimed the ITC on the valid tax invoices under GST that the supplier raised and made tax payments to the supplier.

The council submitted that the SCN has been issued post acknowledging the instructions included in Circular No. 183/15/2022 on December 27, 2022, and more specifically Clause 4.1.1 thereof. According to the circular in the case, where the difference between the ITC claimed in FORM GSTR-3B and that available in FORM GSTR 2A of the registered person concerning the supplier for the financial year is more than Rs 5 lakh.

The proper officer asks the registered person to produce a certificate for the pertinent supplier from the Chartered Accountant (CA) or the Cost Accountant (CMA), certifying that supplies concerning the invoices of the supplier have actually been made by the supplier to the registered person and the tax on these supplies has been paid through the supplier in his return in FORM GSTR 3B. Certificates issued by CA or CMA shall contain UDIN.

The court sees that the case needs additional examination and will list the case dated February 22, 2024.