Input tax credit reversal dispute: similar assessees cannot face recovery once the common legal issue has been decided in their favour.

The Delhi HC held that demand and recovery proceedings could not be sustained against a similarly situated assessee where the same issue on reversal of input tax credit after credit notes had already been decided in favour of other assessees and that view had been sustained in higher proceedings. The petitioner's factual position was not materially different, so the prior appellate outcome governed its case as well. Delay and laches did not justify refusing relief on these facts, although costs were imposed for the petitioner's procrastination. The demand was quashed, the impugned order set aside, and substantive relief granted in favour of the assessee.

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Issues: Whether the demand and recovery proceedings against the petitioner could be sustained when the common legal issue had already been decided in favour of the assessees and the petitioner was similarly situated, notwithstanding that the petitioner had not pursued a statutory appeal in time.

Analysis: The dispute concerned reversal of input tax credit claimed on purchases after credit notes were issued by selling dealers. The legal question had already been decided in favour of the assessees in connected proceedings, and the facts of the petitioner were not materially different. The Court held that the prior appellate outcome, as sustained in higher proceedings, had to inform the petitioner's case as well. The objection based on delay and laches did not justify denying relief in the peculiar facts, though costs were warranted for the petitioner's procrastination.

Conclusion: The demand against the petitioner was quashed, the impugned order was set aside, and relief was granted in favour of the assessee.

Final Conclusion: A similarly situated assessee could not be subjected to recovery on a demand that had been found unsustainable on the same legal issue, and the writ petition was ultimately disposed of by granting substantive relief with costs.

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