Tax Credit Dispute Resolved: Notices Nullified, Proper Officer Ordered to Comprehensively Review Input Tax Credit Claims

HC set aside show cause notices and orders under CGST and DGST Acts related to Input Tax Credit claims. Respondent acknowledged registration cancellation issues and agreed to remand matter to Proper Officer for fresh consideration. Court directed personal hearing and comprehensive review of petitioner's explanations, effectively nullifying previous unreasoned administrative orders.

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Issues:
Challenging impugned show cause notices and orders under CGST Act and DGST Act.

Analysis:
The petitioner filed a petition challenging impugned show cause notices and orders under the CGST Act and DGST Act. The impugned orders were passed under Section 73 of the CGST Act and the DGST Act based on show cause notices issued earlier. The petitioner was accused of availing excess Input Tax Credit (ITC) due to non-reconciliation of information and alleged violation of Section 16 (2) (c) of the Acts by availing ITC from suppliers who had not paid taxes to the Government. Specifically, M/s Feron Life Sciences Private Limited was mentioned as a supplier. Additionally, the petitioner was accused of availing ITC on exempted supplies that needed to be reversed.

The petitioner responded to the show cause notices with detailed explanations, but the impugned orders were passed without considering these explanations. The orders lacked reasoning and merely stated that the petitioner's reply was insufficient without addressing the content of the explanations provided. The court noted a trend of passing unreasoned orders close to the limitation period without proper consideration of taxpayer explanations.

The respondent acknowledged the retrospective cancellation of M/s Feron Life Sciences Private Limited's GST registration, which had been restored by a previous court order. The respondent agreed to set aside the impugned orders and remand the matter to the Proper Officer for fresh consideration, including a personal hearing for the petitioner. The petitioner agreed to this course of action.

Consequently, the court set aside the impugned orders and remanded the matter to the Proper Officer for reevaluation. The Proper Officer was directed to review the petitioner's reply and provide an opportunity for a personal hearing. The petition was disposed of accordingly, along with any pending applications.

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