High Court overturns reversal of Input Tax Credit, finding Assessing Officer lacked authority.

The High Court set aside the impugned orders of the Assistant Commissioner regarding the reversal of Input Tax Credit claimed by a registered dealer. The Court found that the reversal of ITC based on cancelled registration certificates of sellers was contrary to the settled legal position. It held that the Assessing Officer did not have the authority to revoke ITC on such grounds unless there was an incorrect claim of ITC by the dealer. The Court allowed the writ petitions, directing the Department to take action against the dealers if needed, and no costs were awarded.

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Issues:
Challenging impugned proceedings of Assistant Commissioner, Reversal of Input Tax Credit (ITC) claimed by registered dealer, Illegal orders passed without opportunity to petitioner, Reversal of ITC based on cancelled registration certificates of sellers, Contrary grounds for passing impugned orders, Settled legal position on revoking ITC.

Analysis:
The case involved two writ petitions filed by a company challenging the Assistant Commissioner's proceedings regarding the reversal of Input Tax Credit (ITC) claimed by the petitioner. The petitioner, a registered dealer, contended that the orders were illegal and contrary to the law. The petitioner had filed objections against the proposed reversal of ITC, citing that it was not open for the respondent to reverse ITC based on the cancellation of sellers' registration certificates. The petitioner had also provided details of purchases made from registered dealers in their objections.

The petitioner argued that the respondent had passed orders without affording an opportunity to the petitioner and had reversed ITC based on the cancellation of sellers' registration certificates. The petitioner relied on previous judgments to support their case, emphasizing that the Assessing Officer did not have the power to revoke ITC based on such grounds. The petitioner's objections and additional replies were not considered by the respondent before passing the impugned orders.

The High Court analyzed the submissions and materials on record. It noted that the respondent's approach of reversing ITC based on cancelled registration certificates was contrary to the settled legal position. The Court referred to a previous judgment where it was held that revoking ITC based on the selling dealer's tax payment status was incorrect unless there was an incorrect claim of ITC by the dealer. The Court set aside the impugned orders, stating that the Department could proceed against the dealers if necessary. The writ petitions were allowed, and no costs were awarded.

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