Assessee Ought To Have Waited For Relevant Form To Go Live On GST Portal Instead Of Making Illegal Adjustment: Allahabad High Court

CASE TITLE: M/S Tikona Infinet Private Limited vs. State of U.P. and Another [Writ Tax No. – 859 Of 2023]

DECIDED ON: 25.7.2023

CORAM: Hon’ble Pritinker Diwaker,Chief Justice Hon’ble Ashutosh Srivastava,J.

COUNSEL FOR PETITIONER: Nishant Mishra,Vedika Nath



The Allahabad High Court stated that the taxpayer should have waited for the relevant form to become available on the GST portal instead of resorting to an unlawful adjustment. The court, led by Chief Justice Pritinker Diwaker and Justice Ashutosh Srivastava, emphasized that the petitioner should have raised a proper complaint on the GST portal help-desk and patiently waited for the appropriate Form to be accessible on the portal, rather than making unauthorized adjustments using Form GSTR-3B of both the transferor and transferee companies. The court also noted that a mere shortage of working capital cannot serve as a justification to circumvent the legal procedures established by the law.


The petitioner is a registered company providing internet services across India, including in the State of U.P. They entered into a Business Transfer Agreement with Tikona Digital Network (TDA), through which the business was transferred to them. TDA had accumulated an unutilized Input Tax Credit (ITC) balance of over Rs. 3,131,68,997. The petitioner attempted to transfer the remaining ITC, as allowed under Section 18(3) of the GST Act and Rule 41 of the CGST Rules, 2017. However, the functionality for filing Form IT-02 on the common portal was not available, despite the matter being communicated to the jurisdictional Assessing Authority without receiving any response. Due to severe working capital issues, the petitioner manually accepted and availed the ITC. After five years, the petitioner was served with a show cause notice demanding the differential ITC of Rs. 2,88,35,905.60, along with interest and penalty. The petitioner responded with a detailed reply, requesting the withdrawal of the show cause notice. Nonetheless, the department proceeded to pass the order confirming the demand, allegedly without considering the petitioner’s reply.


The court observed that the department’s rejection of the assessee’s claim based on the unavailability of the GST common portal online was not justifiable. Consequently, the court nullified the previous order and granted the department the freedom to issue a new order, considering the petitioner’s objections and providing them with a fair hearing, following all legal procedures diligently.

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Written by- Mansi Malpani

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