2024 (7) TMI 1202 - HC - GST

Reversal of Input Tax Credit in respect of credit notes issued by the supplier - HELD THAT - Sub-section (3) of Section 15 of applicable GST statutes provides for a reduction in the value of supply on account of a discount if such discount has been duly recorded in the invoice issued in respect of such supply or if such discount is established in terms of an agreement entered into either before or at the time of supply although the supply may be subsequent to such agreement. In this case the petitioner has prima facie established that neither of the requirements under sub-section (3) were satisfied. In such event the supplier would be liable to pay tax on the full value of supply. The exercise of jurisdiction under Article 226 is discretionary and subject to self imposed fetters. One such fetter is when an efficacious alternative remedy is available. It should be borne in mind that the existence of an alternative remedy is a material consideration but not a bar to the exercise of jurisdiction. In the case at hand on the basis that the other issues require reappraisal of evidence the petitioner has approached the appellate authority in respect thereof. As regards this issue since it is a pure legal issue the petitioner has chosen to approach this Court. As recorded earlier the conclusion is ex facie erroneous on this issue and the appellate authority under applicable GST statutes does not have the power to remand. The impugned order dated 26.02.2024 is set aside only insofar relating to reversal of Input Tax Credit for the value of credit notes issued by the supplier is concerned. As a corollary defect no.3 is remanded for reconsideration by the original authority. After providing a reasonable opportunity to the petitioner including a personal hearing the assessing officer is directed to issue a fresh order within three months from the date of receipt of a copy of this order. Petition disposed off by way of remand.

Summary

Issues:
Challenge to an order regarding defect no.3 in a writ petition.

Analysis:
The petitioner contested an order dated 26.02.2024, specifically objecting to defect no.3 related to the reversal of Input Tax Credit concerning credit notes issued by the supplier. The petitioner argued that the value of supply should not include discounts unless specific conditions under sub-section (3) of Section 15 of the GST statutes are met. The petitioner claimed that the credit notes were financial in nature, citing Circular No.92/11/2019-GST to support the argument. The respondent, represented by the Additional Government Pleader, highlighted that the petitioner had appealed other defects but only challenged defect no.3 in the writ petition. The respondent emphasized the importance of exhausting statutory remedies before seeking judicial intervention.

The court examined sub-section (3) of Section 15 of the GST statutes, which allows a reduction in the value of supply due to a discount if certain conditions are fulfilled. It was noted that the petitioner failed to establish compliance with these conditions, making the supplier liable to pay tax on the full value of supply. The impugned order considered the discount as a service provided by the purchaser to the supplier, a conclusion disputed by the petitioner as erroneous. The court agreed with the petitioner's contention, finding the assessing officer's conclusion contrary to GST principles and requiring reconsideration.

Regarding the availability of alternative remedies, the court acknowledged that jurisdiction under Article 226 is discretionary, with self-imposed limitations when effective alternative remedies exist. Despite the petitioner pursuing an appeal on other issues, the court decided to intervene due to the purely legal nature of the defect no.3 issue and the appellate authority's lack of remand power. The court set aside the impugned order solely concerning defect no.3, remanding it for reassessment by the original authority within three months, emphasizing the importance of providing the petitioner with a fair opportunity, including a personal hearing.

In conclusion, the writ petition was disposed of with no costs, and the related motions were closed, focusing on the specific issue of defect no.3 and the need for a fresh assessment in compliance with the court's directions.