A writ petition filed against an order issued by the tax authorities. The petition challenges only one specific aspect of the order, which relates to the reversal of Input Tax Credit (ITC) for credit notes issued by a supplier.

Background:

• The petitioner received a show cause notice from the tax authorities regarding six defects in their tax filings.
• The petitioner replied to the notice and subsequently received an order (impugned order) addressing all six defects.
• This writ petition specifically challenges only defect no. 3, which deals with the reversal of ITC for credit notes.

Petitioner's Argument:

• The petitioner argues that the credit notes issued by the supplier were financial credit notes and did not represent a discount.
• They rely on Section 15(3) of the GST Act and a relevant circular (Circular No.92/11/2019-GST dated 07.03.2019) to support their claim.
• As per their argument, the discount offered by the supplier doesn't fall under the conditions for a reduction in the value of supply, hence no reversal of ITC is required.
• The petitioner argues that the impugned order wrongly concluded that the discount constituted a service provided by the petitioner to the supplier.

Respondent's Argument:

• The government pleader representing the respondent argues that the petitioner should have appealed all defects through the designated appellate authority.
• They believe the petitioner shouldn't be allowed to choose which issues to challenge through a writ petition.

Court's Decision:

• The court acknowledges the existence of an alternative remedy (appeal) but finds it's not a complete bar to exercising its jurisdiction under Article 226.
• The court finds merit in the petitioner's argument regarding defect no. 3 because it involves a pure legal issue and the appellate authority lacks the power to remand such matters.
• Considering the erroneous conclusion in the impugned order, the court decides to exercise its jurisdiction on this specific issue.

Outcome:

• The court sets aside the impugned order only insofar as it relates to the reversal of ITC for credit notes.
• The court remands defect no. 3 back to the original authority for reconsideration.
• The original authority is directed to provide a hearing to the petitioner and issue a fresh order within three months.

GST Case Law Shivam Steels Versus Assistant Commissioner

Citation-2024 TAXONATION 1421 (MADRAS)

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