The Madras High Court ruled that the order of Goods and Service Tax (GST) refusing Input Tax Credit (ITC) by invoking section 17(5) of the GST Act, 2017, was set aside without pointing out the reason.
The Madras High Court set aside a Goods and Services Tax (GST) order refusing Input Tax Credit (ITC) under section 17(5) of the GST Act, 2017, without specifying the reason.
The applicant, Sri Dhanalakshmi Steels, contested the impugned order on 27.08.2024, in which the applicant’s claim of Input tax credit was asked to be disallowed on the premises that it is not eligible, invoking Section 17(5) of the GST Act.
The counsel of the applicant furnished that the impugned notice while asking to invoke section 17(5) of the GST Act has merely cited that the Input tax credit will not be available concerning the list of commodities and services cited and does not specify the reasons for the clauses u/s 17(5) which gets attracted and consequences in the refusal of the claim of the applicant of the ITC.
Applicant’s counsel furnished that in answer to the notice, they cited that they are only involved in the trading of goods, which are purchased, and no additional procedure is performed via them. Therefore, no part of the inputs on which the credit was claimed was being used by the applicant for personal consumption or construction of their own building.
The applicant’s counsel shall furnish that they were ready and willing to produce the tax invoices of the inward supply of taxable goods for the pertinent period whenever it is suitable for the respondent.
Subsequently, the respondent, without showing the clause u/s 17(5), which stood attracted consequence in the refusal of the claim of ITC of the applicant, has fixed the personal hearing dated 9.8.2024. However, the impugned order was passed, validating the proposal on the premise that the applicant had not produced the tax invoice nor taken the opportunity of a personal hearing.
The applicant’s counsel furnished that until they have been notified of the clause under which the ITC was asked to be refused, any chance of a personal hearing shall be an empty formality since they shall not be in a position to put forth their matter.
It was furnished that it is fundamental that the taxpayer or the person against whom an adverse order is asked to be passed should be made aware of the matter that needs to be fulfilled.
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The respondent’s counsel furnished that the applicant has not provided the taxable invoices and that they have been directed to the impugned order being passed validating the proposal.
However, to a pointed question as to whether the respondent authority has shown to the applicant as to the clause u/s 17(5), which stood lucrative, the respondent’s counsel furnished that it seems it was not accomplished.
The order has been set aside by the single bench of Justice Mohammed Shaffiq permitting the respondent authority to issue a notice showing the clause u/s 17(5) of the act, which gets drawn to allow the applicant to answer and hence move as per the statute post providing the applicant a chance of hearing.
| Case Title | Sri Dhanalakshmi Steels vs. The Assistant Commissioner (st) |
| Citation | W.P. No.38730 of 2024 and W.M.P.Nos.41935 and 41936 of 2024 |
| Date | 02.01.2025 |
| For Petitioner | Mr.V.Srikanth |
| For Respondents | Ms.Amrita Dinakaran |
| Madras High Court | Read More |
