GST Library
Subscription
GST News
GST Videos
GST Calendar
GST Case Laws
GST Notifications
GST Act / Rules
GST Rates
GST Set-off Calculator
GST Forms
Full Site Search
Classification by CTA
E-way Bill
Finance Bill

GST e-Books
GST Act & Rules
GST Rates Compendium
Classification by CTA

TaxReply India Pvt Ltd.
TM
Free GST updates via...
twitter
8130462634

Read Full Case Law

Writ application for refund of GST dismissed by High Court because petitioner did not approach the Court with clean hands.

It is settled law that a petitioner who files a petition invoking the extra ordinary writ jurisdiction has to come to Court with clean hand. Further, a petitioner who seeks equity must do equity. In commercial/appellate jurisdiction, a Court may have to grant relief if all the ingredients of a statutory provision are satisfied. But this is not so in a writ jurisdiction where relief may be denied to a petitioner on the ground that he has not approached the Court with clean hands, even when he satisfies all the ingredients of a statutory provision.

- High Court 

Petitioner

Present writ petition has been filed challenging the rejection order passed by respondent in RFD-06. Petitioner seeks refund of ₹ 2,05,05,890/- along with interest thereon.

Petitioner states that he was unable to discharge its GST liability in the third half of the year 2020-21 due to financial constraints. He states that the petitioner had duly filed all its returns upto April and May 2020 and is entitled to refund within sixty days from the date of filing Form GST-RFD-01 in accordance with Section 54(7) of the Central Goods and Services Tax Act, 2017. He states that as per Rule 90 of Central Goods and Services Tax Rules, it is mandatory to issue the acknowledgement in RFD-02 within fifteen days and if not done, all further proceedings would be without jurisdiction. Consequently, according to learned counsel for petitioner, due to lapse of time, the respondent is bound to grant refund as prayed for.

High Court

However, a perusal of the impugned order reveals that very serious findings of fake Input Tax Credit have been given by the respondent in the impugned order. The key points from the impugned order is as below:-

Premise of the taxpayer was found locked at the time of visit by Anti Evasion.

No documents in response to the Summons have been submitted by taxpayer.

The taxpayer has neither submitted any documents to the Anti Evasion branch till date nor appeared before the investigation agency.

As per GSTR-2A, taxpayer has received Input tax credit mainly from three L1 stage suppliers, viz. M/s Gaurav Industries; M/s Isha International) and M/s Ganesh Industries.

And the GST registration of M/s Gaurav Industries and M/s Isha International have been cancelled suo mota by GST department with effect from 14.03.2020 and 24.04.2019 respectively, however, as per GSTR-2A, they had supplied goods in the month of April 2020.

During analysis of Input Tax Credit availed by the taxpayer, it was seen that one of the L2 supplier of the taxpayer i.e M/s Sagar International had made outward supplies and passed ITC for medicine (HSN -3004) and Ready made Garments & Synthetic Wallets (HSN; 62, 4202), however they had received inward supplies and ITC for Dry Fruits i.e, Almonds, Anjeer, Pista etc. (HSN 0802, 0804, 2008)

That M/s Sagar International has been found non-existent at the principal place of business;

That Summons issued to L1 supplier of the taxpayer i.e. M/s Ganesh Industries has been received back undelivered;

That it appeared that the L2 supplier M/s Sagar International has issued bogus invoices and passed on fake ITC;

That the taxpayer is also reflected in Report 35A of DGARM and a report "Not recommended" has been sent; that further investigation is in progress."

From above report of Anti Evasion, It is clear that the L1 and L2 suppliers have passed on fake Input Tax Credit for which the taxpayer is claiming refund.

In view of above, the claim of refund of ITC amounting to ₹ 2,05,05,890/- detailed as under is liable to be rejected.....”

It is settled law that a petitioner who files a petition invoking the extra ordinary writ jurisdiction has to come to Court with clean hand. Further, a petitioner who seeks equity must do equity. In commercial/appellate jurisdiction, a Court may have to grant relief if all the ingredients of a statutory provision are satisfied. But this is not so in a writ jurisdiction where relief may be denied to a petitioner on the ground that he has not approached the Court with clean hands, even when he satisfies all the ingredients of a statutory provision.

In the present case, none of the findings given in the impugned order like premises of the petitioner being found locked during inspection; the partner of the petitioner not responding to the Summons; and L1 & L2 suppliers having issued fake and bogus invoices and passed on fake Input Tax Credit, have been dealt with leave alone challenged. Consequently, this Court is of the view that it would not be appropriate to entertain the present writ petition. Moreover, as the impugned order is an appealable order, present writ petition is dismissed, with liberty to the petitioner to avail the appellate remedy in accordance with law.


★ Read Full Case Law ★


Click to checkout plans and offers.
Author:

TaxReply


Jul 27, 2021


Post your comment here !


8263
 

Other Articles