Kotdwar Steel Limited Vs Deputy Commissioner
Date: March 27, 2025
Subject Matter
Blocking of ITC without proper legal basis or pre-intimation is unmerited
Summary
The Uttarakhand High Court criticized the actions of the tax department in the case concerning Kotdwar Steel Limited, particularly regarding the unmerited blocking of GST Input Tax Credit (ITC) without proper legal basis or pre-intimation. The court found the department's actions to resemble punishment without trial, unacceptable under the law, and contrary to the GST Act's objectives of promoting tax compliance without harming businesses and livelihoods. The court emphasized the importance of sustaining businesses for employment and economic growth, imploring the department to align its actions with the GST Act's goals. It issued an interim order to ensure any future actions taken by the department must comply with the provisions of the GST Act, and set a hearing for April 29, 2025, allowing the department to submit a counter-affidavit by then. The court underscored its role in ensuring fair tax administration and protecting businesses from coercive measures that lack justification.
FULL TEXT OF THE JUDGMENT/ORDER OF UTTARAKHAND HIGH COURT
Heard Mr. Rakesh Prasad Singh and Mr. Kanti Ram Sharm a, learned counsel for the petitioner and Ms. Puja Banga, learned Brief Holder for the State.
2. The working of the Department is startling and shocking. It is not known and incomprehensible as to which provision of law permits the Department to take deterrent and coercive action, even prior to issuance of pre- intimation notice.
3. The act complained of is akin to imposition of punishment and then conducting the trial.
4. The conduct of the Department is deplorable. The aim and objective of the GST Act, in our considered opinion, is not to destroy businesses or ensure their closures. The GST regime was brought- in with the objective of ensuring tax compliances, and not with the intent or objective of ensuring loss of livelihoods.
5. We hope that the Department would bear this in mind. The growth of businesses and sustenance of businesses is vital for employment generation and growth of the Nation. I f the Department can bear this in mind and act in consonance with the stated objectives of the Act, it would be rendering yeomen service to the business com m unity. Such actions reflect a mindset, which we do not wish to name here.
6. In that view, there shall be an interim order, as prayed for, and any action shall be duly in compliance with the provisions of the GST Act.
7. List on 29.04.2025.
8.Counter-affidavit, if any, may be filed by then.