Input Tax Credit reversal under GST remanded for fresh hearing, with pre-deposit required before reconsideration.

Input Tax Credit reversal under the State GST Act turned on whether the registered person had been given a proper hearing and could substantiate the underlying transactions with invoices, e-way bills, lorry receipts and payment proof. The Court noted that Section 74 had been invoked on allegations of fraudulent availment with intent to evade tax and that the petitioner had approached belatedly, but still balanced revenue interests against the need for a further opportunity to prove the claim. The assessment order was quashed and the matter remanded for fresh consideration, subject to pre-deposit of 10% of the disputed tax demand and a fresh hearing.

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Issues: Whether the assessment order reversing Input Tax Credit under Section 74 of the State Goods and Services Tax Act, 2017 required interference and remand for fresh consideration.

Analysis: The assessment record indicated that the petitioner was not heard before the order was passed, although notice had been issued. The dispute centred on the genuineness of the underlying transactions and the entitlement to Input Tax Credit, with the registered person being expected to produce supporting material such as tax invoices, e-way bills, lorry receipts, and proof of payment. The Court also noted that the petitioner had approached belatedly and that Section 74 appeared prima facie to have been invoked on allegations of fraudulent availment with intent to evade tax. Balancing the need to afford a further opportunity to establish the transaction against the revenue interest, the Court directed remand with a condition of pre-deposit.

Conclusion: The assessment order was quashed and the matter was remanded for reconsideration, subject to remittance of 10% of the disputed tax demand and a fresh opportunity of hearing.

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