HC quashes order on wrongful input tax credit for motor vehicle; case sent back for fresh review under GST rules

The HC quashed the impugned order concerning wrongful availment of input tax credit on a motor vehicle, noting the petitioner had reversed the credit in the GSTR-3B return for March 2021. The matter was remitted to the respondents for fresh consideration, allowing the petitioner an opportunity to explain the reversal. The quashed order is to be treated as an addendum to the original show cause notice. The writ petition was disposed of at admission.

---

---

The Madras High Court, in a writ petition disposed of at admission, addressed the issue of the petitioner wrongly availing input tax credit on a motor vehicle purchased in December 2020. Although the petitioner reversed the input tax credit in the GSTR-3B return filed for March 2021, the impugned assessment order dated 15.02.2025 (assessment year 2020-2021) was passed pursuant to a notice under Form GST DRC 01 dated 08.02.2024, demanding tax, penalty, and interest. The petitioner had not replied to the notice. The Court noted the respondent's submission that the petitioner had an alternative remedy by way of appeal but emphasized the petitioner's right to be heard given the reversal of credit. The Court quashed the impugned order and remitted the matter to the respondents to pass a fresh order on merits, treating the quashing as an addendum to the show cause notice. The petitioner was directed to file a reply within 30 days of receiving the order copy, failing which the respondents may proceed as if the writ petition was dismissed. In sum, the Court held: the impugned order "shall stand quashed" and the case is remitted for fresh consideration, ensuring procedural fairness given the reversal of input tax credit by the petitioner.

---