🚨 Legal Update! Hindustan Unilever Ltd 🏭 takes on the Union of India 🇮🇳 in the Rajasthan High Court 🏛️ over tax liability and credit matching issues. A significant move that could reshape GST mechanisms. 💼 #LegalNews #RajasthanHighCourt

The main issue raised by the petitioner concerns the absence of a proper mechanism to match the credit note of a supplier with the ITC (Input Tax Credit) reversal by the recipient.

Previously, under Section 43 of the CGST Act/RGST Act, there was an obligation for the department to undertake such matching exercises. However, this provision was later removed.

The petitioner's counsel argued that it's not feasible for the petitioner to provide a certificate from the recipient as proof of reversal of credit to avail a reduction in tax liability.

They believe the responsibility should fall on the department to perform this matching and that their tax reduction claim shouldn't depend on any certificate or proof of ITC reversal.

The court observed that the main challenge to the provision's validity arises from its workability or practicality. #GSTWisdomByARR

Since there's currently no statutory requirement for the respondent to perform the matching, if the petitioner seeks a tax liability reduction, they must provide proof of the recipient's reversal.

The petitioner has pointed out difficulties in obtaining such certificates or proofs but has also acknowledged obtaining them in certain instances. The court decided to further deliberate on this issue in the next hearing.

While the court hasn't provided any immediate relief or interim order, the counsel for the Union of India has been instructed to suggest an appropriate mechanism for consideration.

The case is set to be listed again on 05-Oct-2023. Title: Hindustan Unilever vs Union of India Court: Rajasthan High Court Citation: D.B. Civil Writ Petition No. 13617/2023 Dated: 06-Sep-2023