Appellate authority remands case for re-examination of Input Tax Credit eligibility & refund claim, directs personal hearing and reasoned order.

The appellate authority remanded the case back to the adjudicating authority for re-examination of the eligibility of Input Tax Credit (ITC) and the refund claim. The adjudicating authority was directed to provide a personal hearing to the appellant and issue a reasoned speaking order. The appeal was disposed of in favor of the appellant for further review and consideration.

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Issues Involved:
1. Wrong ITC claim due to cancellation of supplier's GST registration.
2. Denial of ITC to the purchasing dealer due to supplier's non-payment of tax.
3. Filing of required returns by the supplier.
4. Section 16(2)(c) of the CGST Act concerning input tax credit.
5. Reliance on GSTR-2A for refund claims.

Issue-Wise Detailed Analysis:

1. Wrong ITC Claim Due to Cancellation of Supplier's GST Registration:
The appellant, M/s. S.K. Solvex Pvt. Ltd., filed a refund application for Rs. 3,27,047/- for April 2019 under Section 54(3) of the CGST Act, 2017. The adjudicating authority observed that the ITC claim was based on invoices from M/s. Astha Trading Company, whose GST registration was canceled effective 5-12-2018. Consequently, a show cause notice was issued, and the refund claim was partially sanctioned, excluding the disputed amount. The appellant argued that the goods were properly supplied and payments were made through proper banking channels.

2. Denial of ITC to the Purchasing Dealer Due to Supplier's Non-Payment of Tax:
The appellant contended that no liability should be imposed on the purchasing dealer for the non-payment of tax by the selling dealer unless fraud or collusion is established. The appellant emphasized that ITC should not be denied to a bona fide purchasing dealer merely due to the selling dealer's fault.

3. Filing of Required Returns by the Supplier:
The appellant highlighted that M/s. Astha Trading Company filed its GSTR-1 and GSTR-3B for April 2019, indicating that the due GST taxes were paid for that period. The cancellation of the supplier's GST registration effective from 5-12-2018 should not affect the appellant's claim for ITC for transactions conducted in April 2019.

4. Section 16(2)(c) of the CGST Act Concerning Input Tax Credit:
The appellant referred to Section 16(2)(c) of the CGST Act, which stipulates that ITC can be availed subject to the payment of tax by the vendor. The appellant argued that even if the vendor has not paid GST, the company should be allowed to avail credit provisionally, provided the vendor has uploaded the invoice details in the GSTR-2A report within the prescribed time limit.

5. Reliance on GSTR-2A for Refund Claims:
The appellant cited Circular No. 59/33/2018-GST, dated 4-9-2018, which clarifies that if the credit appears in GSTR-2A, it is sufficient to process the refund claim. The appellant argued that the rejection of the refund amounting to Rs. 3,27,047/- was against the law and should be refunded.

Conclusion:
The appellate authority reviewed the case records and submissions. It was noted that the adjudicating authority processed the refund application and sanctioned Rs. 6,27,004/-, while the remaining amount was rejected due to the "Wrong ITC Claim." The appellate authority found that the adjudicating authority issued the order without providing a personal hearing to the appellant.

The appellate authority decided to remand the case back to the adjudicating authority to re-examine the eligibility of ITC and the refund claim for the remaining amount. The adjudicating authority was directed to follow the principles of natural justice by providing a hearing to the appellant and to pass a reasoned speaking order.

Disposition:
The appeal was disposed of by remanding the case back to the adjudicating authority for re-examination and to pass a reasoned speaking order after providing an opportunity for a hearing to the appellant.

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