2024 (10) TMI 947 - HC - GST

Challenge to order confirming demand for excess utilization of Input Tax Credit (ITC) under CGST Act and DGST Act - impugned order does not consider the said contention and has mechanically confirmed the liability - violation of principles of natural justice - HELD THAT - As apparent from the plain language of Section 16(2)(c) of the CGST Act, the ITC would be available only in respect of such supplies where the tax is actually being paid to the government, either in cash or through utilisation of the ITC admissible in respect of the said supply. There is no specific finding in the impugned order that the suppliers, from whom the petitioner had availed supplies, have not paid the tax in respect of their outward supplies to the petitioner, either in cash or by utilisation of admissible liability. The impugned order is set aside - matter remanded to the concerned Adjudicating Authority - petition disposed off by way of remand.

Summary

Issues:
Challenge to order confirming demand for excess utilization of Input Tax Credit (ITC) under CGST Act and DGST Act.

Analysis:
The petitioner challenged an order confirming a demand of &8377;46,27,512 for excess utilization of ITC under the CGST Act and DGST Act. The impugned order was based on a Show Cause Notice (SCN) alleging that the petitioner availed ITC from suppliers who had not paid taxes on their outward supplies, citing Section 16(2)(c) of the CGST Act. The petitioner contended that the suppliers were registered and had paid taxes. However, the impugned order did not consider this contention and mechanically confirmed the liability without specifying the defaulting dealers. The court noted that there was no finding that the suppliers had not paid taxes, a requirement under Section 16(2)(c) of the CGST Act.

The court referred to Section 16(1) and 16(2)(c) of the CGST Act, emphasizing that ITC is only available if tax has been paid to the government by the supplier. The court highlighted that the impugned order lacked a specific finding that the suppliers had not paid taxes on outward supplies to the petitioner. Upon submission by the respondents, the court remanded the matter to the Adjudicating Authority for fresh consideration, providing the petitioner with an opportunity of hearing. The court directed the Adjudicating Authority to decide expeditiously, preferably within eight weeks.

In conclusion, the court set aside the impugned order and remanded the matter for reconsideration by the Adjudicating Authority, emphasizing the necessity for a specific finding on whether the suppliers had paid taxes on the supplied goods and services. The petition was disposed of accordingly, with all pending applications also being resolved.