Input tax credit set-off objections rejected without reasons were set aside, with refund claim permitted on remand.

Cryptic rejection of objections on adjustment and preference of input tax credit set-off was held unsustainable because the assessment orders did not deal with the assessee's reply and no statutory procedure governed the set-off method adopted. The assessment was therefore set aside on that limited issue and remitted for fresh consideration. On refund of reversed input tax credit, the assessee was allowed to raise a written claim in the reassessment, and the assessing authority was directed to consider it in accordance with law. The Court also noted that an unnumbered appeal against the earlier decision relied on by the assessee did not suspend that decision.

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Issues: (i) Whether the rejection of the assessee's objections regarding adjustment and preference of set-off of input tax credit was sustainable. (ii) Whether the assessee was entitled to seek refund of input tax credit reversed by it and to have that claim considered in the assessment proceedings.

Issue (i): Whether the rejection of the assessee's objections regarding adjustment and preference of set-off of input tax credit was sustainable.

Analysis: The assessment orders were found to be cryptic and unreasoned, with the objections rejected in a single line without dealing with the assessee's reply or the legal position. The Court noted that no procedure had been prescribed under the statute for the particular method of preference of set-off adopted by the assessee, and relied on the earlier view that, in the absence of a statutory prescription, the assessing authority could not insist on a particular mode that was adverse to the assessee. The finding on adjustment of input tax credit was therefore unsustainable.

Conclusion: The rejection of the assessee's objections on adjustment and preference of set-off of input tax credit was set aside, and the matter was remitted for fresh assessment on that aspect.

Issue (ii): Whether the assessee was entitled to seek refund of input tax credit reversed by it and to have that claim considered in the assessment proceedings.

Analysis: The Court noticed that the assessee had not specifically pressed a standalone refund plea in the objections, but since the assessment was being set aside on the input tax credit issue, liberty was granted to raise a written claim for refund of the reversed credit. The Court also held that the mere pendency of an unnumbered appeal against the earlier decision relied upon by the assessee did not suspend that decision.

Conclusion: The assessee was permitted to make a claim for refund of the reversed input tax credit, and the assessing authority was directed to consider it in accordance with law while redetermining the assessment.

Final Conclusion: The assessment orders were interfered with to the limited extent of input tax credit adjustment, the matter was sent back for fresh consideration on that head, and the assessee was allowed to pursue refund-related relief before the assessing authority.

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