2026-VIL-648-MAD
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SGST High Court Cases

GST – Availment of Input Tax Credit based on overruled Judicial Decision - Invocation of Section 74 of CGST Act, 2017 for wrongly availed ITC based on a judicial decision that was subsequently reversed by the Supreme Court – Petitioner, engaged in renting and leasing of immovable properties, availed input tax credit on works contract services and construction materials on the basis of the Orissa High Court's decision in Safari Retreats Pvt. Ltd. The Petitioner initially sought approval from the respondent for claiming input tax credit of a certain amount but proceeded to avail a significantly higher amount without obtaining formal concurrence from the respondent. Subsequently, the Orissa High Court's decision was reversed by the Supreme Court, following which the respondent issued SCN under Section 74 of the CGST Act for wrongly availed input tax credit - Whether the respondent was justified in invoking Section 74 of the CGST Act for determining wrongly availed input tax credit when the appellant had acted in reliance upon a judicial decision that was later reversed by the Supreme Court – Petitioner’s contention that having intimated the department regarding the availment of the said input tax credit, the respondent was not justified in invoking Section 74 - HELD – The Section 17(5)(c) and (d) of the CGST Act contains a prohibition and prohibits a person for availing of Input Tax Credit on works contract services supplied for the construction of an immovable property. The restrictions contained in Sections 17(5)(c) and (d) of the CGST Act are clear statutory prohibitions blocking input tax credit on works contract services and construction materials for immovable property. While the petitioner relied upon the Orissa High Court's decision, the very foundation and basis for availing the input tax credit was removed when the Supreme Court reversed that decision – Mere communication to the respondent without formal approval or concurrence from the authority cannot entitle the appellant to bonafide believe that it was entitled to avail the blocked credit. The communication was not responded to by the respondent, which does not grant any legal sanctity to the availment. Additionally, the petitioner initially sought approval for a limited amount but without obtaining concurrence proceeded to avail a significantly larger amount of input tax credit, which establishes that no case has been made out against invoking the extended period of limitation. Even otherwise, the credit that was wrongly availed by the petitioner was beyond the period of limitation. Therefore, the invocation of the extended period of limitation is justified – The writ petition is dismissed - The invocation of Section 74 for multiple tax periods – HELD - As far as the challenge to the impugned proceedings for multiple tax periods is concerned, the issue now stands covered against the petitioner in terms of the decision of the Karnataka High Court in M/s Chimney Hills Education Society vs. Additional Commissioner of Central Tax and Another. Therefore, no further views are expressed.
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