2023-VIL-658-DEL
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SGST High Court Cases

GST - Blocking of Input Tax Credit on the ground that credit transitioned from the VAT regime to the GST regime is erroneous - Issue of Show Cause Notice by relying on Circular No. F.3(429)/GST/Policy/2022/1067-1072 dated 08.03.2022 proposing demand of tax identical to the amount of ITC blocked - Petitioner seeking direction to respondents for unblocking ITC and claiming interest at 12% per annum on amount of ITC blocked – HELD – the impugned show-cause notice does not effectively provide any reasons for raising a demand. The opening sentence of the impugned show-cause notice appears to be a mechanical reproduction of the statutory provision - the impugned show-cause notice cannot be sustained – the abovesaid Circular cannot be read as permitting the proper officer to mechanically create a demand. The proper officer can issue a show cause notice only if are reasons for raising any demand against the taxpayer and the said reason must specifically be stated in the show cause notice. It does, prima facie, appear that the respondent had followed the said Circular in a mechanical manner - the impugned show cause notice is liable to be set aside as the same fails to disclose any reason for proposing the recovery and is incapable of eliciting any meaningful response - The impugned show cause notice is set aside - In so far as the petitioner’s prayer for interest is concerned, there is no statutory provision for granting interest for the period when the ITC is blocked - The petition is disposed of
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