Dealers Win Challenge: Input Tax Credit Restored, CGST Order Overturned and Remitted for Fresh Scrutiny HC allowed petition challenging CGST order, setting aside denial of input tax credit for cancelled dealers. Court remitted show cause notice for ...
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Dealers Win Challenge: Input Tax Credit Restored, CGST Order Overturned and Remitted for Fresh Scrutiny
HC allowed petition challenging CGST order, setting aside denial of input tax credit for cancelled dealers. Court remitted show cause notice for re-adjudication, directed cross-examination of witnesses, and instructed reconsideration of Rs 20 Lakhs involuntary deposit. All parties' rights remain preserved, with specific aspects of the original order modified and referred back for fresh evaluation.
Issues involved: Impugning order u/s 73 of CGST Act, denial of ITC to petitioner, right of cross-examination denied, coercion to deposit Rs 20 Lakhs, refund request not considered.
Impugning order u/s 73 of CGST Act: The petitioner challenged an order dated 29.12.2023 passed u/s 73 of the Central Goods and Services Tax Act, which created a demand against the petitioner.
Denial of ITC to petitioner: The petitioner contested the order to the extent that it confirmed the demand by denying Input Tax Credit (ITC) in relation to suppliers whose GST registration was cancelled retrospectively.
Right of cross-examination denied: The petitioner requested the right of cross-examination of witnesses and authors of documents relied upon by the proper officer, but it was denied due to paucity of time, causing serious prejudice as noted by the proper officer himself.
Coercion to deposit Rs 20 Lakhs: The petitioner was coerced to deposit Rs 20 Lakhs during a search and survey, which was not considered in the impugned order despite being raised by the petitioner and noted by the proper officer.
Refund request not considered: The petitioner sought a refund of the Rs 20 Lakhs deposited involuntarily during search and survey proceedings, which was not addressed in the impugned order.
Conclusion: The High Court set aside the impugned order to the extent of denial of input tax credit for cancelled dealers, remitting the Show Cause Notice for re-adjudication after allowing cross-examination of witnesses. The Court directed the proper officer to reconsider the refund request of Rs 20 Lakhs in accordance with law, citing previous judgments on involuntary deposits. The Court clarified that it did not comment on the nature of the deposit and left all rights and contentions of the parties open. The petition was allowed with a limited order of remit to the proper officer, and the challenge to Notification No. 9 of 2023 regarding the initial extension of time was left open.
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