To,
The Office of the Deputy Commissioner
Ward No. …, Delhi State GST
Room No. ….., … Floor
Vyapar Bhawan, I.P. Estate
New Delhi – 110 002
Sub: Reply to Show Cause Notice in case of M/s …….(GSTIN: 07……)
Ref: Your Notice dated …. DIN: ……
Respected Sir,
Greetings!
1. We, M/s …….., trader of ……. Located at ……………. , Laxmi Nagar, East Delhi – 110 092, are in receipt of above mentioned Notice through which we have been asked us to report ITC as per Circular 170/02/2022-GST and disclose figures of IGST in our GSTR-3B.
|
This office has received the information from ‘Economic Intelligence Unit’ and it is noticed that you have not disclosed this omission and are also following the incorrect practice of reporting of ITC in your GSTR-3B. You have excess IGST in your GSTR-2B of Financial Year 2022-23. Hence you have to do correction by proper reporting of IGST ITC in table 4(D)(2) as per guidelines of Circular No. 170/02/2022- GST. The details of IGST ITC reflected in GSTR-2B but not reported in table 4(D)(2) of GSTR-3B is as under: |
2. We would like to contest this Notice on the following grounds:
2.1 We have claimed and availed correct Input Tax Credit (ITC) as per GST Laws. We have followed all sections 16, 17 and 18 along with all relevant rules and paid taxes correctly.
2.2 This is not the case where we are subjected to extra claim of ITC or ineligible ITC.
2.3 The case is of presentation and disclosures which was suggested as per above mentioned Circular.
3. Relevant Extracts of Paragraph 4.3 (F) of Circular No. 170/02/2022-GST dated 06-Jul-2022
F. ITC not available, on account of limitation of time period as delineated in subsection (4) of section 16 of the CGST Act or where the recipient of an intraState supply is located in a different State / UT than that of place of supply, may be reported by the registered person in Table 4D (2). Such details are available in Table 4 of FORM GSTR-2B.
Discussions and Submissions
4. We would like to state that the power to issue Circulars in GST is similar to the power conferred on the Central Board of Central Excise and Customs for the purpose of Central Excise and Service Tax in Section 37B of Central Excise Act’1944.
4.1 It is a settled position in law that the instructions and circulars that are issued by the “Board” are binding on the Department. Circulars are meant for adoption of uniform practices. Supreme Court in Ranadey Micronutrients vs Collector of Central Excise cited in 2016 Taxo.online 53
4.2 Similarly in the realm of Sales Tax, particularly in the case of Section 3(1A) of the Kerala General Sales Tax Act’1963, it has been decided that the circulars are binding on all the authorities administering the Tax Department and not on the Courts and the Assesses. Supreme Court in State of Kerala vs Kurian Abraham Private Limited cited in 2016 Taxo.online 54
4.3 Further, with reference to Article 141 of the Indian Constitution, it has been decided that the circulars issued by the Board cannot prevail over the Supreme Court and the High Court. Hence, the circulars are not binding on the Courts. Supreme Court in Commissioner of Central Excise, Bolpur vs Ratan Melting and Wire Industries cited in 2016 Taxo.online 55 (SC)
Conclusion and Request for Relief
5. It is hereby humbly submitted that in our opinion we are not liable for the reversal of ITC based on the above-mentioned discussion and judgments. It is a well-established principle in Indian jurisprudence that circulars issued by tax authorities, while providing clarification and guidance, are not legally binding on taxpayers or courts. This principle has been upheld in various Supreme Court judgments, emphasizing that circulars cannot impose obligations that go beyond the statutory provisions of the law.
6. In the context of the notice under reference, it is important to highlight that our reporting methodology, while not strictly adhering to the prescribed format in the circular, has not resulted in any revenue loss to the exchequer. The issue at hand pertains to the presentation and disclosure of the IGST ITC and does not impact the actual tax liability or the ITC claim substantively.
7. Given the above, we request the department to consider the legal position that circulars are advisory in nature and not mandatory legal requirements. Furthermore, considering there is no revenue loss and the matter is purely of presentation, we kindly request the department to drop the proceedings initiated against us based on the circular.
8. We remain committed to compliance with the GST laws and regulations and assure you of our cooperation. However, we firmly believe that in this instance, adherence to the circular should not be construed as a mandatory legal requirement.
9. We respectfully request the department to reconsider the notice in light of the arguments and evidence presented. We are fully cooperative and prepared to provide any additional documentation or clarification as may be required.
10. Your favorable consideration of this prayer would not only redress the immediate issue at hand but also reinforce the broader principle that the tax system should serve the ends of justice and fairness, aligning with the legislative intent behind the GST and ITC.
11. We would request you to drop the Notice and we would further request your lordship to provide us “Opportunity of Being Heard” before passing any order against us.
Thanks, and Regards
For ….….
Authorised Signatory
Note and Disclaimer: This draft template is for your kind consideration, you can customise the same. However, this should not be considered as any legal opinion or advise from our side. We will not be responsible for any action or in-action taken on based of this email or letter template.
