Case Note & Summary
The dispute arose from a show cause notice issued to the petitioner, Tikona Infinet Private Limited, regarding the recovery of Input Tax Credit (ITC) amounting to Rs. 18,30,58,995. The petitioner challenged the notice on the grounds that the necessary GST ITC-02 form was not filed electronically due to the non-functionality of the department's portal, which was admitted by the respondents. The petitioner had availed the ITC correctly during the period from September 2017 to November 2017, but the form could only be filed manually as the electronic option was unavailable. After several years, the notice was issued alleging wrongful availment of ITC based solely on the manual filing of the form. The court noted that the only basis for the notice was the failure to file electronically, despite the admitted issues with the portal. The court emphasized that the law does not compel compliance with impossible requirements and that the petitioner had complied with the filing requirements to the best of its ability under the circumstances. The court quashed the show cause notice, directing the respondents to consider the manually filed forms and to not deny ITC benefits solely based on the method of filing. The ruling reinforced the principle that procedural requirements should not be strictly enforced when compliance is rendered impossible by the department's own actions.
Headnote
A) Taxation - Input Tax Credit - Jurisdiction for Recovery - Central Goods and Services Tax Act, 2017, Section 18(3) - The issuance of a show cause notice for recovery of ITC was quashed as the department's portal was not functional for electronic filing, rendering the notice arbitrary and beyond jurisdiction. The court held that the petitioner could not be penalized for non-compliance with electronic filing when it was impossible to do so (Paras 25-41).
Issue of Consideration
Whether the issuance of the show cause notice for recovery of Input Tax Credit was justified given the non-functionality of the electronic filing portal.
Final Decision
The court quashed the show cause notice dated 17 August 2023, directing the respondents to consider the manually filed forms and not deny ITC benefits based solely on the method of filing.
Law Points
- Input Tax Credit
- Jurisdiction
- Manual Filing
- Electronic Filing
- Arbitrariness
