2024 (10) TMI 1385 - HC - GST

Availment of Input Tax Credit (ITC) in respect of the IGST paid on manpower supply services received by the Petitioner - IGST on the External Commercial Borrowings (ECB) received from VTAL - exemption provided under of Notification No. 9/2017-Integrated Tax (Rate) dated 28.06.2017 - HELD THAT - The issue regarding admissibility of input tax credit by invoking Section 16(4) is covered by the Judgment of this Hon ble Court in the cases of Bosch 2024 (9) TMI 496 - KARNATAKA HIGH COURT and M/S. MUSASHI AUTO PARTS INDIA PVT. LTD. VERSUS STATE OF KARNATAKA BENGALURU DEPUTY COMMISSIONER OF COMMERCIAL TAXES BENGALURU 2024 (7) TMI 1545 - KARNATAKA HIGH COURT read with Circular No. 211/5/2024-GST dated 26/6/2024. In regard to the second demand Circular No. 218/5/2024- GST dated 26/6/2024 and the decision of this Hon ble Court in the case of AO Smith India Water Products Pvt. Ltd 2024 (8) TMI 1453 - KARNATAKA HIGH COURT are applicable. The authorities are directed to consider the same including the applicability of Section 128A Section 13(3)(c) as regards demand of interest on the aforesaid amounts. It is deemed just and appropriate to dispose of this petition by issuing certain directions - Petition is hereby disposed of.

Summary

Issues:
1. Petitioner seeks writ of Certiorari to quash a Show Cause Notice demanding input tax credit.
2. Petitioner claims rightful input tax credit on IGST paid for services received.
3. Petitioner disputes liability to pay IGST on ECB received.
4. Validity of demands made by the respondents in the Show Cause Notice.

Analysis:
The petitioner, engaged in manufacturing and distribution, challenged a Show Cause Notice seeking to quash the demand for input tax credit and IGST payment. The petitioner contended that the demands were illegal, arbitrary, and against statutory provisions. The demands included IGST on Seconded employees and GST on external commercial borrowings. The petitioner argued that Circulars and previous judgments supported their position, citing Circular No. 211/5/2024-GST and judgments in Bosch Limited Vs. State of Karnataka and Musashi Autoparts Private India Ltd. Vs. State of Karnataka.

The first demand for input tax credit was challenged based on Circular No. 211/5/2024-GST and previous judgments, asserting the validity of the credit taken. The Court referenced Circulars and judgments to support the petitioner's position. Regarding the second demand, covered by Circular No. 218/5/2024-GST and a previous judgment, the Court directed authorities to consider the applicability of specific sections concerning interest on the amounts in question. The Court found the demands were adequately addressed by existing Circulars and judgments, leading to the disposal of the petition with certain directions.

In the final order, the Court disposed of the petition, allowing the petitioner to respond to the Show Cause Notice within three weeks. The respondents were instructed to consider the petitioner's reply, provide a reasonable opportunity for a hearing, and make appropriate decisions within four weeks. The Court's decision was based on the facts, Circulars, judgments, and statutory provisions presented during the proceedings.