2024 (10) TMI 127 - HC - GST

Wrongful availment of input tax credit (ITC) in respect of the exempted supplies - It is alleged in the SCN that the petitioner had not declared the correct tax value in filing its annual return under the FORM GSTR-09 - HELD THAT - It is relevant to note that remanding a matter to the concerned authority has the effect of providing further time of two years for the adjudicating authority to adjudicate the SCN. In the aforesaid manner the authority has effectively frustrated the legislative provisions stipulating the period of limitation for adjudicating the assessments. In similar matters in KHEMKA AVIATION PRIVATE LIMITED VERSUS SALES TAX OFFICER CLASS II/AVATO WARD 1 ORS. 2024 (8) TMI 700 - DELHI HIGH COURT , the respondents had made a statement that if the matter is remanded to the concerned adjudicating authority, the same would be disposed of within a period of six months from date. The impugned order is set aside - matter remanded to the adjudicating authority to consider it afresh - petition disposed off by way of remand.

Summary

Issues:
1. Impugning an order passed by the adjudicating authority under the CGST Act and DGST Act confirming a demand.
2. Allegation of wrongfully availing input tax credit (ITC) in respect of exempted supplies.
3. Disregard of petitioner's response to Show Cause Notice (SCN) by the adjudicating authority.
4. Confirmation of demand on the last date before the expiry of the limitation period.
5. Request for setting aside the impugned order and remanding the matter to the adjudicating authority.
6. Direction for the adjudicating authority to complete the adjudication within six months.

Analysis:
The petitioner filed a petition challenging an order confirming a demand of Rs. 1,06,52,96,461 under the CGST Act and DGST Act, based on an allegation of wrongfully availing ITC for exempted supplies. The petitioner responded to the SCN, asserting non-claim of ITC for exempted supplies and providing a reconciliation statement. However, the impugned order disregarded the petitioner's response, stating it lacked supporting documents and clarity. The order confirmed the demand just before the limitation period's expiry, a recurring issue in such cases, indicating a rush to conclude proceedings.

The respondent's counsel agreed to set aside the impugned order and remand the matter for fresh consideration. The court noted that remanding the matter would provide the adjudicating authority an additional two years to decide, potentially circumventing the limitation period. Citing similar cases, the court directed the adjudicating authority to complete the adjudication within six months after granting the petitioner a hearing opportunity. Failure to comply within the stipulated period would result in the proceedings lapsing, emphasizing the importance of timely resolution in such matters to avoid undue delays and ensure procedural fairness.

In conclusion, the court disposed of the petition by setting aside the impugned order and remanding the matter for fresh consideration, emphasizing the need for timely adjudication and providing a clear directive for completion within six months. This judgment highlights the importance of procedural adherence and timely resolution in tax matters to uphold the principles of natural justice and prevent undue delays in the adjudication process.