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High Court of Judicature at Madras: Tvl. Shivam Steels
vs. Assistant Commissioner (ST)(FAC)
Case No.: W.P.No.15335 of 2024
Order Date: 25.06.2024
Court: High Court of Judicature at
Madras
Executive
Summary:
The High
Court of Judicature at Madras ruled on a writ petition filed by Tvl. Shivam
Steels against an order issued by the Assistant Commissioner of State Tax
(FAC), Hosur (South)-III Assessment Circle. The petitioner challenged the order
related to the reversal of Input Tax Credit (ITC) in respect of credit notes
issued by the supplier. The court found the respondent's conclusions erroneous
and remanded the matter for reconsideration by the original authority.
Facts of
the Case:
· Petitioner: Tvl. Shivam
Steels, represented by its proprietor Mr. Gyan Manchanda.
· Respondent: Assistant
Commissioner (ST)(FAC), Hosur (South)-III Assessment Circle.
· Context: The petitioner
received a show cause notice on January 12, 2024, addressing six defects. The
petitioner responded on January 22 and February 14, 2024. The order in
question, issued on March 12, 2024, required the petitioner to reverse ITC
related to credit notes from the supplier.
Submission
by Petitioner:
· The petitioner's counsel
argued that:
· The credit notes in question
were financial, not related to a service provided by the petitioner.
· The value of supply would not
include discounts unless conditions in sub-section (3) of Section 15 of the GST
statutes were met, which were not in this case.
· The discount was erroneously
treated as a service by the petitioner to the supplier, contrary to GST laws.
Submission
by Respondent:
The
respondent's counsel contended:
· The petitioner should not
bypass the statutory remedy and should address the defect through the appellate
authority.
· The defect no.3 should be
re-evaluated, considering the discount as a service.
Judgment:
The court
found the respondent's interpretation of the discount as a service erroneous.
The judge noted that the discount was treated as a post-sale financial
incentive, not a service provided by the petitioner. Consequently, the court
set aside the impugned order regarding defect no.3 and remanded it to the
original authority for reconsideration. The original authority was directed to
issue a fresh order within three months, following a reasonable opportunity for
the petitioner to present their case.
Conclusion:
The High
Court's decision highlights the importance of accurately interpreting GST
statutes, particularly regarding discounts and ITC reversals. The case
underscores the judiciary's role in ensuring that tax authorities adhere to the
principles of natural justice and the correct application of the law.
Disclaimer: All the
Information is based on the notification, circular and order issued by the
Govt. authority and judgement delivered by the court or the
authority information is strictly for educational purposes and on the
basis of our best understanding of laws & not binding on anyone.
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