GST recovery notices under best judgment assessment set aside as input tax credit treatment required fresh reconsideration.

Recovery notices for GST arrears arising from best judgment assessments under the Tamil Nadu GST Act were challenged on the basis that input tax credit had not been allowed while computing the demand. The court noted that the assessment was founded on GSTR-2A data, that the law as then applied did not grant input tax credit, and that the Finance Act, 2024 introduced Sections 16(5) and 16(6) of the CGST Act with a corresponding State amendment expected. The notices were set aside and the matter was remitted for fresh consideration on merits in accordance with law, with the availability of input tax credit to be addressed in the reassessment.

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Issues: Whether the recovery notices issued for GST arrears pursuant to best judgment assessments could be sustained without granting the benefit of input tax credit, and whether the matter required remand for fresh consideration.

Analysis: The petitioner had been assessed under Section 62 of the Tamil Nadu Goods and Services Tax Act, 2017 on best judgment basis for non-filing of returns, and the resulting demand was founded on the GSTR-2A data. The order noted that input tax credit had not been allowed under the law as it then stood, but also recorded the subsequent legislative change brought in by the Finance Act, 2024 introducing Sections 16(5) and 16(6) of the Central Goods and Services Tax Act, 2017, with corresponding amendment expected in the State Act. The order further proceeded on the basis that the benefit of input tax credit ought to be given where tax is demanded.

Conclusion: The recovery notices were set aside and the matter was remitted to the respondents to pass a fresh order on merits and in accordance with law.

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