Supreme Court Upholds Allahabad High Court’s Decision Favoring Vivo Mobile in Rs. 235.52 Crores GST Case
In a landmark judgment, the Supreme Court of India upheld the decision of the Allahabad High Court, dismissing a Special Leave Petition filed by the State of Uttar Pradesh against Vivo Mobile India Private Limited. The High Court had previously quashed a demand of Rs. 235.52 Crores made by GST Authorities under Section 74(9) of the Goods and Service Tax Act, 2017, against the tech giant.
This case, which has garnered significant attention in the legal and business communities, originated from a dispute over the computation of Input Tax Credit (ITC) by Vivo Mobile. The company had computed its ITC cumulatively for the period from February 2020 to August 2020, as per their GSTR-3B returns filed in September 2020. However, the GST Authorities contested this, alleging an excess claim of ITC amounting to Rs. 110 Crores. Their argument was based on Circular No. 113 dated 11.11.2019 by the Central Board of Indirect Taxes and Customs, which stipulated that cumulative adjustment could only be made up to the date of filing of the GSTR-1 declaration by suppliers.
In the midst of this legal battle, Vivo deposited approximately Rs. 11 Crores while filing a writ petition before the High Court. Despite the absence of interim protection, GST Authorities proceeded to recover Rs. 220.15 Crores from Vivo’s bank accounts during the pendency of the writ petition.
The Allahabad High Court, in its judgment, recognized Input Tax Credit as a substantive right under Section 16 of the GST Act. The Court observed that the statutory provisions could not be overridden by a circular. It also pointed out that the legislature, through the proviso to Rule 36(4) of the GST Rules, created a legal fiction to extend the period for reconciliation of eligible ITC from one to eight months, in light of the COVID-19 pandemic. This interpretation was aimed at easing the burden on taxpayers and revenue authorities during a challenging time.
The High Court’s decision to allow Vivo’s writ petition and direct the respondents to return the entire amount with 6% interest on the excess recovery was a significant point of contention. The Supreme Court, acknowledging the arguments of the Additional Solicitor General, stated that the determination of excess recovery would be subject to verification. However, it held that if an excess recovery was indeed made, the High Court’s direction on interest would prevail.
The Supreme Court’s dismissal of the Special Leave Petition filed by the State of Uttar Pradesh marks a crucial moment in Indian corporate law, particularly in the interpretation of GST regulations and the rights of taxpayers. This decision not only brings relief to Vivo Mobile but also sets a precedent for similar cases, emphasizing the judiciary’s role in balancing statutory provisions with the practical realities faced by businesses.
The case, titled “State of Uttar Pradesh and Anr. v. M/s Vivo Mobile India Private Ltd. & Ors.,” will undoubtedly be cited in future litigations involving complex tax disputes, highlighting the evolving nature of Indian tax law and the judiciary’s approach to resolving such disputes.
