Anushka Mansharamani
The Gujarat High Court declined to direct the Goods and Service Tax authority to give back the credit of the ITC company during the investigation.
The Gujarat High Court passed this order while hearing the case filed by S.S. Industries, who sought a ruling on the issues of whether the concerned authority has the power to retain the amount deposited during an investigation in the absence of any confirmed liability.
Mr. Paresh M. Dave, representing the petitioner, stated that as per Section 74(1) of the CGST Act, there is no assessment taken place by following the mandatory procedure.
He further mentioned Section 74(9) of the CGST Act, stating that there is no order under this section that helps determine the short payment of the tax.
Mr. Devang Vyas, representing the respondents, contended that as per Rule 86(A), the concerned authority has the power to block the ITC, in case they found the transactions crafty.
The division bench comprising Chief Justice Vikram Nath and J.B. Pardiwala, after hearing the contentions, stated that the issues discussed regarding the debit of the ITC from the investigation are debatable, and a prima facie case could be made against the writ applicants.
The Gujarat High Court held “At the fag end of the investigation, we do not deem fit and reasonable to pass an order in exercise of our writ jurisdiction directing the respondents to give back the credit of the ITC to the writ applicant and permit them to avail the same.”
It further said, “Therefore, we are saying that let the investigation be completed within six weeks and an appropriate decision shall be taken and communicated to the writ applicant.”
The Court stated that the period of investigation cannot be indefinite and therefore stated that due to the ample amount of time taken the concerned authorities must come to some conclusion.
It lastly stated that Rule 86(A) has a one-year limit and thereby instructed the concerned authority to complete the investigation within 6 weeks from the date of the order passed and conclude whether there exists a case under Section 74 as contended.
