According to the notice, the steel major was required to show cause before the Additional/Joint Commissioner of Central GST & Central Excise, Jamshedpur, Jharkhand within 30 days “as to why the Goods and Service Tax (GST), amounting to Rs 1007,54,83,342 for the period FY2018-19 through FY2022-23 shall not be demanded and recovered” from the company.
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The notice, issued by the Office of the Commissioner (Audit), Central Tax, Ranchi, on June 27, said the input tax credit was availed in contravention of the provisions of Section 74(1) of the Central Goods and Services Tax Act, 2017/State Goods and Services Act, 2017 (CGST/SGST) read with Section 20 Integrated Goods and Services Tax Act, 2017.
A bench of justices JB Pardiwala and K Vinod Chandran said there was no deliberate attempt by Tata Steel to evade tax or avail excess input tax credit.
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“We do not find any such factual facts having been stated to make out a case of a deliberate device employed to evade tax or avail excess input tax credit, as coming out from the show cause-cum-demand notice. The bland statement made at some places of suppression of facts, merely to avail the extended period of limitation would barely suffice and puts to peril the notice under Section 74,” the bench said.Tata Steel had contended before the top court that there is no allegation of fraud, willful misstatement or suppression of facts.
The dispute arose from a show cause notice issued to Tata Steel for the financial years 2018-19, 2019-20 and 2020-21 concerning an alleged mismatch of Input Tax Credit (ITC) and short payment of tax.
The notice was issued under Section 74 of the Central Goods and Services Tax Act, which deals with GST demand involving fraud or suppression.
The steel major submitted that the notice contained no factual allegations establishing fraud, wilful misstatement or suppression of facts.
The top court said the proceedings under Section 73/74 can be initiated only on the satisfaction of the assessing officer.
It said even if observations or objections are made on audit, the assessing officer should enter his satisfaction before a notice is issued.
“Insofar as a notice under Section 74, the satisfaction should be not only of mismatch of ITC and short payment of tax having occurred, as is alleged in this case, the officer should be satisfied that either fraud/willfully,” the bench said.
“The fact that the department had taken up the objections on audit with the Public Accounts Committee itself indicates that there was no satisfaction at the end of the department, meaning the assessing officer; as to the mismatch or the short fall of payment of tax having occurred, not to say anything about the suppression alleged,” the court said.