AGARTALA, India, March 11 -- Tripura High Court issued the following order/judgement on Feb. 10:

1. Petitioner is a partnership firm carrying on business of rubber in various parts of the country including the State of Tripura. It was registered under the CGST Act, 2017 and also under the SGST Act, 2017.

2. For the purpose of carrying on its business, it had to purchase certain materials which are used in furtherance of manufacturing of finished products from respondent No.7 for the period stretching from 08.03.2018 to 30.11.2018.

3. According to the petitioner, prior to effecting purchases of the input materials from respondent No.7, for production of the finished materials, petitioner had paid off the due taxes payable therefor, and even the materials purchased had been utilized in the course of manufacturing of the finished products, and therefore the petitioner was entitled to Input Tax Credit ["ITC", for short].

4. It is also stated that the petitioner was under a bona fide belief that respondent No.7 had deposited the due taxes payable by the petitioner, and so the petitioner claimed benefit of ITC admissible to it.

5. But the respondent No.6, exercising powers under Section 73(1) of the CGST Act, 2017 had issued a show cause notice on 14.01.2021 to the petitioner stating that for the tax period stretching from August, 2017 to July, 2019, the due tax has either not been paid or paid short or refunded or released erroneously or the ITC was wrongly availed or wrongly utilized by the petitioner, and asked the petitioner to show cause why Rs.22,09,964.04/- should not be recovered from the petitioner.

6. In the same notice, the petitioner was asked to furnish reply, and the petitioner submitted a reply on 29.12.2021.

7. Thereafter, an order dt.17.02.2022 was passed by the sixth respondent saying that the petitioner had unauthorizedly claimed ITC, and directed the petitioner to make the payment of the above mentioned amount.

8. Challenging the same, this Writ Petition has been filed.

9. It is the contention of the petitioner that the wording of the show cause notice dt.14.01.2021 itself is vague, evasive, and the allegations are mutually contradictory, and because it is vague, the show cause notice itself cannot be sustained.

10. Petitioner also contended that Section 16(2)(c) has been wrongly invoked to deny ITC to the petitioner, since the transaction between the petitioner and the seventh respondent was a bona fide transaction, and there was no mechanism under the CGST/SGST Act, 2017 by which the petitioner could compel the seventh respondent to discharge to the respective governments' duty to make over the tax collected by him from the petitioner, and for the default of the seventh respondent in making over the tax paid by the petitioner for the purchase of materials to the respective governments, petitioner cannot be penalized.

*Rest of the document can be viewed at: (https://hcservices.ecourts.gov.in/ecourtindiaHC/cases/display_pdf.php?filename=zDLovBVSUw02H8XukOjXfC%2BiMBzizlL9WEXjAFarmK%2FpuqcWIlZTlMTm%2B43HDDaO&caseno=WP(C)/849/2022&cCode=1&cino=TRHC010018442022&state_code=20&appFlag=)

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