GST: High Court Says Rule 86A Show Cause Notice Cannot Be Challenged Prematurely:

GST: High Court Says Rule 86A Show Cause Notice Cannot Be Challenged Prematurely

The Madras High Court has refused to interfere with a GST show cause notice issued to a taxpayer regarding the wrongful input tax credit (ITC) claims. The GST department had issued a show cause notice asking the petitioner to explain why the ITC amounting to Rs 2,74,116 should not be recovered. The department claimed that the ITC was availed by using fake invoices issued by the supplier. The petitioner challenged this before the Madras High Court.

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During the hearing before the High Court, the petitioner pointed out that the GST authority was earlier asked to explain how a negative blocking of ITC of Rs 1,20,00,000 could be made based on the Show Cause Notice. The department explained that it had also issued another show cause notice, Rule 86A(1)(a) and (c) of the TNGST Rules 2017, asking the petitioner to explain why the ITC of Rs 99,38,884, claimed on the strength of invoices issued by the supplier along with interest and penalty, should not be recovered.

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After reviewing the matter, the court held that there was no reason to interfere with the show cause notices at this stage since the petitioner has a legal remedy available under GST. The court directed the petitioner to submit a representation under Rule 86A of the GST Rules before the jurisdictional officer.