The Patna High Court has held that there is no jurisdictional error on part of state authority in issuing notice in the wrongful availment of Input Tax Credit (ITC).
The bench of Justice Rajeev Ranjan Prasad and Justice Sourendra Pandey has observed that Section 74 of the CGST Act talks of determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful-misstatement or suppression of facts. According to sub-section (1), wherever it appears to the Proper Officer that there is any wrongful availment of input tax credit or where the input tax credit has been utilized by reason of fraud or any willful statement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made or who has wrongly availed or utilized input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with the interest payable thereon under Section 50 and a penalty equivalent to the tax specified in the notice.
A search operation was carried out by the officers of Directorate General of GST Intelligence (DGGI) in the premises of the petitioner company. Certain papers and documents including purchase invoices were found.
The petitioner claimed that pursuant to the summons, the petitioner appeared through its representative and submitted all the documents. By issuing yet another summon, the DGGI called for some information. It is the stand of the petitioner that on the basis of a letter, the Asst. Commissioner of State Tax initiated scrutiny of returns under Section 61 of the Bihar Goods and Services Tax Act, 2005.
The petitioner contended that the central agency had already initiated a proceeding in the matter and once that proceeding had been initiated, an authority under the State would have been advised to refrain from initiating another proceeding in the same matter.
The court found no jurisdictional error on the part of the State Authority in passing the order.
Case Details
Case Title: CTS Industries Limited Versus DGGI
Case No.: Civil Writ Jurisdiction Case No.1898 of 2023
Date: 08-04-2025
Counsel For Petitioner: D.V. Pathy, Senior Advocate
Counsel For Respondent: Dr. Krishna Nandan Singh, ASG
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