Input credit adjustment under the legacy dispute scheme requires objective reconciliation and a reasoned entitlement decision before denial.

Under the legacy dispute resolution scheme, the Designated Committee had to consider whether the petitioner's demand was substantially discharged through cash payment and CENVAT/input credit adjustment before taking any further step. The circular dated 27 August 2019 contemplated adjustment of tax already paid through input credit where the matter remained disputed, so the Committee was required to objectively reconcile the payment particulars and determine whether 50% or more of the demand had been paid. A fresh consideration and a reasoned decision on entitlement were therefore necessary, with a further hearing only if relief was refused.

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Issues: Whether the Designated Committee was required to consider the petitioner's assertion that the demand had been substantially discharged by cash payment and CENVAT credit adjustment under the legacy dispute resolution scheme, and to pass a reasoned order before proceeding further.

Analysis: The dispute turned on whether amounts stated by the petitioner, including payments through input credit, could be taken into account while determining entitlement under the scheme. The circular dated 27 August 2019 expressly contemplated adjustment of tax already paid through input credit where the matter remained under dispute. In the absence of any demonstrated reconciliation of the payment particulars, the matter required a fresh consideration by the Designated Committee. The Committee was directed to examine the petitioner's claim that 50% or more of the demand had been paid and to record a reasoned decision on entitlement under the scheme, with a further hearing only if relief was refused.

Conclusion: The petitioner succeeded to the extent that the matter had to be reconsidered by the Department/Designated Committee in the manner directed, and the committee could not proceed without first adjudicating the petitioner's entitlement under the scheme.

Final Conclusion: The writ petition resulted in a limited procedural and substantive relief in favour of the petitioner by requiring reconsideration and a reasoned determination on the scheme benefit before any adverse further step.

Ratio Decidendi: Where a statutory scheme contemplates adjustment of tax paid through input credit, the designated authority must objectively reconcile the payment particulars and record a reasoned decision on entitlement before denying relief.

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