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2025 (4) TMI 729 - HC - GSTAvailement of excess Input Tax Credit (ITC) - case of the Petitioner is that it had not availed any ITC and it was only due to a typographical error that the said credit was shown as having been availed of in the year 2018-19 - Ex-parte nature of order in original - HELD THAT - This Court is of the opinion that the Petitioner ought to be relegated to follow the procedure prescribed in paragraphs 4 5 of the Guidelines by Circular No 26/26/2017 dated 29th December 2017 by making a deposit of 10% of the demanded amount. Accordingly the Petitioner is given time of eight weeks to make the said pre-deposit in terms of paragraph 4 of the Guidelines. Upon the said pre- deposit being made as per the Guidelines the demand which has been confirmed by the Appellate Authority shall remain stayed until the constitution of the GST Appellate Tribunal. Upon the Appellate Tribunal being notified the Petitioner is free to file its appeal by following the prescribed procedure. Petition disposed off.
ISSUES PRESENTED and CONSIDERED
The primary legal issues considered in this judgment are: 1. Whether the Petitioner had availed excess Input Tax Credit (ITC) as alleged by the Respondent Department. 2. Whether the Petitioner was denied the opportunity to rectify the alleged error in ITC reporting through the "edit" facility provided by Circular No 26/26/2017. 3. Whether the Order-in-Original and the subsequent Order-in-Appeal were valid, especially given the ex-parte nature of the initial order and the lack of an operational Appellate Tribunal. 4. The applicability of the Guidelines for recovery of outstanding dues in the absence of an Appellate Tribunal, as outlined in Circular No. 224/18/2024. ISSUE-WISE DETAILED ANALYSIS 1. Excess Input Tax Credit (ITC) Availment Relevant Legal Framework and Precedents: The Central Goods and Services Tax (CGST) Act, 2017, particularly Sections 73 and 122, govern the recovery of wrongly availed ITC and penalties for such actions. Court's Interpretation and Reasoning: The Court examined the Petitioner's claim that the ITC was not availed but was erroneously reflected due to a typographical error by the Chartered Accountant. The Petitioner attempted to rectify this error in 2020, which was not considered by the Respondent. Key Evidence and Findings: The Court noted the Petitioner's reliance on Circular No 26/26/2017, which allows for rectification of over-reported ITC using an "edit" facility, provided the credit was not utilized for offsetting liabilities. Application of Law to Facts: The Court acknowledged the Petitioner's argument regarding the error and the subsequent attempt to rectify it, which was not facilitated by the Respondent. Treatment of Competing Arguments: The Respondent argued that the demand was confirmed due to the Petitioner's failure to utilize the edit facility in a timely manner. Conclusions: The Court found merit in the Petitioner's claim of error and the lack of opportunity to rectify it, suggesting the need for a procedural remedy. 2. Rectification Opportunity and Procedural Fairness Relevant Legal Framework and Precedents: Circular No 26/26/2017 provides a mechanism for taxpayers to rectify errors in ITC reporting. Court's Interpretation and Reasoning: The Court highlighted the procedural unfairness in not allowing the Petitioner to utilize the edit facility to correct the alleged error. Key Evidence and Findings: The Petitioner argued that the edit facility was not made available, resulting in the issuance of a Show Cause Notice (SCN) and subsequent orders. Application of Law to Facts: The Court considered the procedural guidelines and the Petitioner's efforts to rectify the error, which were not accommodated by the Respondent. Treatment of Competing Arguments: The Respondent maintained that the procedural guidelines were followed, but the Court found a lack of procedural fairness in this instance. Conclusions: The Court concluded that the Petitioner should have been allowed to rectify the error through the edit facility, as per the Circular. 3. Validity of Orders and Lack of Appellate Tribunal Relevant Legal Framework and Precedents: Section 112 of the CGST Act outlines the appellate process, which is currently hindered by the absence of an operational Appellate Tribunal. Court's Interpretation and Reasoning: The Court recognized the procedural challenges faced by taxpayers due to the absence of an Appellate Tribunal and the ex-parte nature of the Order-in-Original. Key Evidence and Findings: The Court noted the Petitioner's claim that the Order-in-Original was passed without proper notice, and the subsequent appeal was dismissed. Application of Law to Facts: The Court considered the procedural deficiencies and the Petitioner's limited recourse due to the lack of an Appellate Tribunal. Treatment of Competing Arguments: The Respondent cited the Guidelines for recovery of dues, which the Court found insufficient in addressing the procedural issues faced by the Petitioner. Conclusions: The Court determined that the Petitioner should follow the Guidelines for making a pre-deposit and await the constitution of the Appellate Tribunal for further appeal. SIGNIFICANT HOLDINGS The Court held that the Petitioner should be allowed to rectify the alleged error through the edit facility, as per Circular No 26/26/2017. The Court also emphasized the procedural unfairness due to the ex-parte nature of the Order-in-Original and the lack of an operational Appellate Tribunal. Core Principles Established: 1. Taxpayers should be afforded the opportunity to rectify errors in ITC reporting through available procedural mechanisms. 2. Procedural fairness is essential in adjudicatory processes, particularly when taxpayers are unable to access appellate remedies due to systemic deficiencies. Final Determinations on Each Issue: The Court directed the Petitioner to make a pre-deposit of 10% of the demanded amount as per the Guidelines, with the demand stayed until the Appellate Tribunal is constituted. The Petitioner may then file an appeal following the prescribed procedure.
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