GST input tax credit reversal before notice required fresh adjudication after proper verification and hearing.

The adjudication order under the GST Act could not be sustained because the disputed input tax credit had already been reversed before the show-cause notice, yet that reversal was not properly verified or considered. The Court noted that the demand had been framed on an incorrect footing, since the real issue on the admitted facts was the effect of a late reversal rather than continued availment of credit. The impugned order was quashed and the matter remanded for a fresh de novo adjudication after considering the GST portal material and giving the petitioner a hearing.

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Issues: Whether the impugned adjudication order, which proceeded on the footing that input tax credit had not been reversed, could be sustained when the reversal had already been made before the show-cause notice, and whether the matter required fresh adjudication after hearing the petitioner.

Analysis: The record showed that the petitioner had reversed the disputed input tax credit before the show-cause notice was issued, but that fact was not properly verified or considered while passing the adjudication order under the Central/State Goods and Services Tax Act, 2017. The dispute also arose from the manner in which the demand was framed, because the real grievance, on the admitted facts, was not availing of credit on exempt supplies after the permissible period but the consequence of a late reversal. In that setting, the proper course was not to sustain the demand as framed, but to require a fresh decision after considering the existing reversal, the material on the GST portal, and the petitioner's opportunity of hearing.

Conclusion: The impugned order was quashed and set aside, and the matter was remanded to the authority for a fresh de novo decision in accordance with law after hearing the petitioner.

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