2025 (3) TMI 731 - HC - GST

Excess Input Tax Credit (ITC) claimed on account of non-reconciliation of information - Input Tax Credit claimed from cancelled dealers return defaulters and tax non payers - petitioner is ready and willing to pay 25% of the disputed tax - HELD THAT - The petitioner shall deposit 25% of the disputed taxes arrived at vide impugned order dated 07.03.2024 as admitted by the learned counsel for the petitioner and the respondents within a period of four weeks from the date of receipt of a copy of this order. The impugned order dated 07.03.2024 is set aside - Petition disposed of.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

(i) Whether the impugned order dated 07.03.2024, which revised the excess Input Tax Credit (ITC) claims, was validly issued and served to the petitioner.

(ii) Whether the petitioner was provided with adequate opportunity to respond to the discrepancies identified in the ITC claims.

(iii) Whether the petitioner is entitled to a remand of the case for reconsideration upon payment of a portion of the disputed taxes.

ISSUE-WISE DETAILED ANALYSIS

(i) Validity of the Impugned Order Dated 07.03.2024

The relevant legal framework involves the Goods and Services Tax (GST) Act, under which the petitioner is registered. The discrepancies in ITC claims were identified during the scrutiny of returns for the period 2018-19. The Court noted that the petitioner was initially assessed for an excess ITC claim of Rs. 7,16,018/-, which was later revised to include an additional Rs. 15,45,336/- in the impugned order dated 07.03.2024.

The Court's interpretation focused on the procedural aspect of serving the impugned order. The petitioner argued that the order was not served through traditional means (tender or RPAD) but was merely uploaded on the GST Portal, which purportedly left the petitioner unaware of the proceedings.

Key evidence included the petitioner's non-response to notices and personal hearing offers, which the respondent argued were sufficient for due process. However, the Court considered the petitioner's claim of inadequate service of notice as a significant procedural lapse.

The Court concluded that the impugned order's service via the GST Portal did not fulfill the requirements for proper notice, thus affecting the order's validity.

(ii) Adequacy of Opportunity to Respond

The petitioner contended that they were not given a fair opportunity to address the discrepancies due to the lack of proper notice. The legal framework emphasizes the right to be heard, which is a fundamental principle of natural justice.

The Court examined the petitioner's claim that they were unaware of the proceedings due to the mode of service. The Court also noted that the petitioner was willing to pay 25% of the disputed taxes to secure a remand for reconsideration.

In addressing competing arguments, the Court weighed the procedural deficiencies against the petitioner's readiness to rectify the situation by engaging with the adjudicating authority upon remand.

The Court determined that the petitioner was not adequately informed, thus not provided with a fair opportunity to respond, warranting a remand.

(iii) Entitlement to Remand for Reconsideration

The petitioner referenced a precedent where a similar matter was remanded upon payment of 25% of disputed taxes. The Court found this argument persuasive, especially given the respondent's lack of objection to such a remand.

The Court's reasoning included the principle of equity, allowing the petitioner another chance to present their case, provided they demonstrate good faith by depositing a portion of the disputed taxes.

The Court concluded that remanding the case with conditions was appropriate, facilitating a fair resolution while safeguarding revenue interests.

SIGNIFICANT HOLDINGS

The Court held that the impugned order dated 07.03.2024 was set aside due to procedural deficiencies in serving notice. The Court emphasized the importance of proper notice and the opportunity to be heard, aligning with principles of natural justice.

The Court established that the petitioner must deposit 25% of the disputed taxes within four weeks to secure a remand for reconsideration. This condition reflects a balance between ensuring compliance and offering the petitioner a fair chance to address discrepancies.

Verbatim, the Court stated: "Failure to comply with the above condition viz., payment of 25% of disputed taxes within the stipulated period i.e., four weeks from the date of receipt of a copy of this order shall result in restoration of the impugned order."

The core principle established is the necessity of proper notice and the opportunity to be heard, which are fundamental to fair adjudication. The Court's final determination included setting aside the impugned order and remanding the matter for reconsideration, contingent upon the petitioner's compliance with the payment condition.