Finalised Proceedings U/S 73 of CGST Act Cannot Be Reopened Unless Fraud or Misrepresentation Is Involved: Allahabad HC
|The Allahabad High Court observed that if the proceedings under Section 73 of the CSGT Act have been finalised, they cannot be reopened except when the Input Tax Credit has wrongly been availed or utilised due to fraud or any wilful mis-statement or suppression of facts to evade tax.
The Court was hearing a Writ Petition challenging the Show Cause issued by the Deputy Commissioner, State Tax under Section 74 of the Central Goods and Services Tax Act, 2017.
The bench of Justice Shekhar B. Saraf and Justice Manjive Shukla observed, “if the proceedings under Section 73 of the CSGT Act have been finalized, they cannot be reopened except the case where the Input Tax Credit has wrongly been availed or utilized due to fraud or any wilful mis-statement or suppression of facts to evade tax.”
Advocate Atul Gupta appeared for the Appellant and Standing Counsel Ankur Agarwal appeared for the Respondent.
Brief Facts-
In the present case, the Petitioner, a public limited company, had centralized Service Tax registration in Uttar Pradesh and, after the introduction of GST transferred unutilized CENVAT Credit into the GST regime. Of this, some amount was transferred to other states, leaving Rs. 2.19 crore in Uttar Pradesh. The Petitioner reversed Rs. 25.31L of Cess. The Department issued a notice alleging discrepancies in the Petitioner’s returns for FY 2017-18, to which it clarified that the credit was correctly claimed. A Show Cause Notice U/S 73 was issued for Rs. 5.76Cr, but after reviewing the Petitioner’s response, the Deputy Commissioner dropped the case. However, again the Department issued another Show Cause Notice under Section 74, claiming excessive ITC of Rs. 1.31Cr, which the Petitioner argues is unjustified as the issue was already settled.
The Court observed, “…Section 73 comes into play in all other circumstances except the cases where Input Tax Credit has been wrongly availed or utilized due to fraud or any wilful mis- statement or suppression of facts to evade tax.”
The Court said, “The field of operation of Section 73 and 74 of the CGST Act is altogether different i.e. Section 73 operates in all other cases of wrongly availed or utilized Input Tax Credit for any reason other than fraud or wilful mis-statement or suppression of facts and Section 74 comes into play when the excessive Input Tax Credit has been availed due to some fraud or wilful mis-statement or suppression of facts.”
“…it is patently manifest that for deriving the jurisdiction to initiate proceedings under Section 74 of the CGST Act, the adjudicating authority must expressly mention in the Show Cause Notice that he is prima-facie satisfied that the person has wrongly availed or utilized Input Tax Credit due to some fraud or a wilful mis-statement or suppression of facts to evade tax and that must be specifically spelled out in the Show Cause Notice.”, the Court further said.
The Court said that the impugned notice does not show any fraud, wilful mis-statement or suppression of facts to evade tax therefore, the proceedings initiated against the Petitioner u/s 74 of the CGST Act are without jurisdiction.
Accordingly, the Court allowed the Writ Petition.
Cause Title: Hcl Infotech Ltd v. Commissioner, Commercial Tax And Another (Neutral Citation: 2024:AHC:158274-DB)