Top Stories Madras HC directs Submission of Form GST ITC-02 as ‘NIL’ if No ITC Transferred, Subjects to 10% Pre-Deposit Condition [Read Order] The petitioner was granted permission to file Form ITC-02 as per prescribed procedure By Navasree A.M – On April 8, 2024 5:50 pm – 2 mins read The Madras High Court, in its directive, has instructed the petitioner to submit Form GST ITC-02 in compliance with the law, specifying ‘NIL’ if no Input Tax Credit ( ITC ) is transferred.  The Court has ordered a reconsideration of a tax demand imposed on GG Organics Care Private Limited, a subsidiary resulting from a demerger of GG Organics Private Limited.

The petitioner, GG Organics Care Private Limited, challenged the tax demand issued against them following an audit initiated in September 2023.  This case arises from a demerger wherein the consumer goods division of GG Organics Private Limited was transferred to GG Organics Care Private Limited. Following an audit conducted from May to August 2023, proceedings were initiated against the petitioner, leading to the issuance of a show cause notice in September 2023 and an impugned order in December 2023.

The petitioner contested the order, citing procedural irregularities in the audit process, particularly emphasising that the audit exceeded the prescribed three-month duration as outlined in Section 65 of applicable GST enactments. Additionally, the petitioner argued that the non-filing of Form ITC-02 was justified as there was no transfer of ITC to the consumer division. However, the Additional Government Pleader contended that the petitioner failed to raise objections regarding the audit duration during the assessment proceedings and asserted that the petitioner was obligated to submit a nil return if no ITC was transferred. The Madras High court acknowledged the petitioner’s concerns regarding the audit duration but emphasised the ambiguity surrounding the exact commencement date of the audit.

Additionally, it noted the petitioner’s claim that no ITC transfer had occurred and deemed it necessary to provide an opportunity for the petitioner to present relevant documents to contest the tax demand. Consequently, a Single bench of Justice Senthilkumar Ramamoorthy set aside the impugned order and remanded the matter for reconsideration, contingent upon the petitioner remitting 10% of the disputed tax demand within two weeks. The court directed the tax authorities to afford the petitioner a reasonable opportunity, including a personal hearing, and issue a fresh order within two months of the remittance. Furthermore, the petitioner was granted permission to file Form ITC-02 as per prescribed procedure. The court disposed of the writ petition with no costs awarded.