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The Goods and Services Tax (GST) department in Mumbai has issued orders to provisionally attach the bank accounts of Awfis, a coworking space provider, over alleged excess input tax credit (ITC) claims of Rs 4.42 crore. The orders direct HDFC Bank and ICICI Bank to attach the accounts, pending a detailed investigation.
The alleged excess ITC claims date back to October 2024, when Awfis had availed of the amount and then reversed it in their self-declared summary GST return filed every month. The company claimed that the amount was initially availed in line with a Supreme Court ruling in favor of Safari Retreats, which allowed companies to claim ITC on construction costs for rental properties.
However, this ruling was later overturned in January 2025 following amendments to the Central Goods and Services Tax Act (CGST) in the Finance Bill 2025. In light of this, Awfis decided to reverse the ITC claims.
In their defense, Awfis claims that the excess ITC claims were only temporary and were subsequently reversed after the Supreme Court ruling was overturned. They also claim that they have not misused the ITC or gained any undue benefit from it.
The attachment of bank accounts is a serious move by the GST department, which is meant to ensure that the company does not dispose of or dissipate the funds pending the completion of the investigation. Awfis has criticized the move, calling it unjust and claiming that it will disrupt the company’s normal operations.
The case highlights the complexities and grey areas in the GST regime, particularly with regards to ITC claims. As the investigation unfolds, it remains to be seen whether Awfis will be able to prove their claims and avoid any further legal action.