GST Input Tax Credit Dispute: Procedural Fairness Mandates Rehearing with Proper Notice and Security Deposit

SC remanded the case involving a textiles unit's GST input tax credit dispute. The court set aside the original order due to lack of hearing opportunity, directing the respondent to issue a fresh notice. The petitioner was required to deposit Rs. 50,000 as security and the respondent must dispose of the case within 30 days, with the deposited amount subject to final adjustment.

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Issues involved:
The issues involved in the judgment are related to the petitioner, a textiles unit engaged in the manufacture of knitted fabrics and lungies, who purchased a motor vehicle but did not avail Input Tax Credit. The respondent issued a notice regarding this matter, leading to the impugned order dated 28.06.2023.

Details of the Judgment:

Issue 1: Availment of Input Tax Credit
The petitioner did not avail Input Tax Credit on the tax paid for the motor vehicle purchased, leading to a notice from the respondent in GST DRC-01 on 21.04.2023. The petitioner filed a reply on 23.06.2023, which was acknowledged by the portal in Form GST DRC-06. The impugned order stated that the petitioner had availed and utilized the Input Tax Credit accrued on the motor vehicle during a subsequent period.

Issue 2: Impugned Order and Opportunity of Hearing
The impugned order, issued on 28.06.2023, did not provide the petitioner with an opportunity of hearing despite the timely submission of the reply. Due to this, the order was set aside, and the case was remitted back to the respondent. However, the petitioner was required to debit a sum of Rs. 50,000/- as security within 15 days. The respondent was directed to issue a fresh notice of hearing and dispose of the case within 30 days.

Issue 3: Treatment of Payment
The amount to be paid by the petitioner as per the order was to be treated as a "deposit," subject to adjustment, appropriation, or refund based on the final outcome of the fresh proceeding. The Writ Petition was disposed of with the specified observations, and no costs were awarded. Connected Writ Miscellaneous Petitions were closed as a consequence of this judgment.

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