GST Input Tax Credit Dispute Resolved: Petitioner Vindicated by Corrective Action and Timely Compliance with Statutory Provisions

SC allowed writ petition challenging GST demand for incorrect input tax credit. Court found petitioner rectified credit within statutory timeline, considered them an honest taxpayer, and set aside the demand order. The 1st respondent was directed to issue fresh orders within three months, with no time limit restrictions under assessment completion notifications.

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Issues:
Challenge to demand for payment of incorrect input tax credit under GST for the year 2017-18.

Analysis:
The petitioner challenged an order demanding payment of Rs. 43,37,212, including interest and penalty, for wrongly availing input tax credit (IGST) of Rs. 21,03,944.02 while filing Form GSTR-3B in 2017-18. The petitioner claimed the mistake was due to a clerical error and rectified it by filing Form GSTR-3B in 2018, reversing the credit. The petitioner argued that the demand should be quashed based on Section 39(9) of the CGST/SGST Acts, allowing rectification until 30.11.2018. The Government Pleader contended that the petitioner failed to provide evidence of credit reversal and should have challenged the order through a statutory appeal instead of a writ petition.

The court acknowledged the petitioner's failure to respond to notices before the order was issued but noted the timely reversal of the claimed credit in 2018. Considering the circumstances of the case, where the credit was not utilized and rectified before any notice, the court deemed the petitioner an honest taxpayer. Section 39(9) allowed rectification until 30.11.2018, and the petitioner filed the reversal in August 2018, meeting the deadline. Consequently, the court allowed the writ petition, setting aside the demand order and remitting the matter for fresh consideration by the 1st respondent with a hearing opportunity for the petitioner. The 1st respondent was directed to issue fresh orders within three months from the specified date.

Additionally, the court declared that any fresh order by the 1st respondent following the judgment would not be affected by the time limits under Section 73(10) of the CGST/SGST Acts or assessment completion notifications for 2017-2018. The writ petition was granted accordingly, recognizing the petitioner's rectification efforts and adherence to statutory timelines for credit reversal.

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