2025 (7) TMI 1864 - HC - GST

Adjudication orders quashed for ignoring petitioner's annual returns and improper ITC claim assessment under GST rules

The HC quashed the adjudication and summary orders for failing to consider the petitioner's annual returns for 2018-19 and 2019-20, relying solely on ... Quashing of adjudication order and summary order - failure to consider annual returns which have been filed for the year 2018-19 and 2019-20 - impugned order has been passed by only considering GSTR-2A and GSTR-3B - HELD THAT:- It was but required for the respondents to have considered the annual returns, tabulated the ITC claims over the various years, as also reversal of the ITC which have been made by filing DRC-03. This not having been done has resulted in the respondents passing an order on the ground that the petitioner has claimed excess ITC when the petitioner apparently has not. These matters requiring factual re-appreciation, the impugned orders not being sustainable, the matter would require to be remitted to respondent No.2 for fresh consideration. The matter is remitted for reconsideration at the stage of reply to the show cause notice - Petition allowed by way of remand. ISSUES: Whether the adjudication order and related summary order under sections 73(10), 73(9), 50 & 122 of the KGST Act, 2017 and CGST Act, 2017 for tax periods April 2019 to March 2020 can be quashed for failure to consider annual returns and reversal of Input Tax Credit (ITC) properly.Whether reliance solely on GSTR-2A and GSTR-3B without considering annual returns and DRC-03 filings leads to erroneous conclusions regarding excess ITC claims.Whether the appellate order under section 107 of the KGST Act, 2017 and CGST Act, 2017 for the same tax periods is sustainable in light of the above issues. RULINGS / HOLDINGS: The adjudication order dated 19-07-2024 and the summary order dated 20-07-2024 are set aside as the respondents failed to consider the annual returns and reversal of ITC through DRC-03, relying only on GSTR-2A and GSTR-3B, resulting in a 'wrong conclusion and wrong calculation' of excess ITC.The appellate order dated 21-02-2025 is also set aside consequent to the quashing of the impugned orders below.The matter is remitted to the second respondent for fresh consideration at the stage of reply to the show cause notice, directing the petitioner to submit the reply without further notice and the authority to consider the reply in accordance with established directions. RATIONALE: The Court applied the statutory provisions under sections 73(10), 73(9), 50 & 122 of the KGST Act, 2017 and CGST Act, 2017, emphasizing that proper factual appreciation requires consideration of all relevant documents, including annual returns and DRC-03 filings, not merely GSTR-2A and GSTR-3B forms.The failure to consider the reversal of ITC and the tabulation of ITC claims over multiple financial years led to an unsustainable order, necessitating remand for reconsideration.The Court referenced directions issued in a prior authoritative case to guide the reconsideration process, ensuring adherence to procedural fairness and comprehensive evaluation of ITC claims.