Input tax credit utilisation under the settlement mechanism required specific clarification before the tax dispute could be decided.

The appellant's claim that input tax credit was utilised under the settlement mechanism for payment of CGST, SGST and IGST, with tax ultimately flowing to the State on utilisation of credit for SGST/WBGST, was not specifically answered in the State's affidavit-in-opposition. The Court directed the State to obtain specific written instructions on those averments, permitted service of papers on the Additional Advocate General for Telangana because that State's stand was relevant, and allowed the private respondent to file an affidavit before the next date. No final adjudication was made, and the matter was kept pending for further affidavits.

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Issues: Whether the appellant's contention regarding utilisation of input tax credit for payment of CGST, SGST and IGST and the consequent settlement of tax to the State was adequately met in the State's affidavit, and whether further participation of the State of Telangana and additional affidavits were required before the appeal could be adjudicated.

Analysis: The appellant's specific averment that credit was availed and utilised under the settlement mechanism, with tax ultimately flowing to the State upon utilisation of credit for payment of SGST/WBGST, was noted to have not been specifically dealt with in the State's affidavit-in-opposition. The State was therefore directed to obtain specific written instructions on those averments. Since the stand of the State of Telangana was considered relevant to the adjudication, liberty was granted to serve the papers on the learned Additional Advocate General for that State. The private respondent was also granted leave to file an affidavit before the next date.

Outcome: No final adjudication was made. The matter was directed to be listed on the next date after further affidavits and service on the State of Telangana.

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