Writ dismissed for delay and no procedural infirmity in excess ITC claim; liberty to appeal within 15 days; pre-deposit waived

Writ petition dismissed by HC for delay and lack of discernible procedural infirmity in the impugned order regarding excess ITC claimed; petitioner filed the petition late and only numbered it after significant delay, and sought redress under Article 226 despite no procedural error shown. Court granted liberty to file an appeal within 15 days, and waived further pre-deposit because the taxed amount confirmed in the demand has already been paid.

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ISSUES PRESENTED AND CONSIDERED

1. Whether the disallowance of Input Tax Credit (ITC) on the ground that suppliers' GSTR-1 for the relevant period was not proved, and consequent confirmation of tax, interest under Section 50(3) and penalty under Section 74(1) of the GST enactment, was sustainable on merits.

2. Whether invocation of Section 161 (suo motu rectification/modification by assessing authority) to partly modify the demand order is permissible and whether the modification affects the correctness of the demand.

3. Whether the writ petition under Article 226 is maintainable when an effective alternative remedy by way of appeal is available and the petitioner delayed institution/numbering of the writ petition.

4. Whether payment of the challenged tax amount affects requirements for pre-deposit for filing the appeal and the consequences for further recovery pending disposal of the appeal.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Disallowance of ITC for lack of proof of suppliers' GSTR-1; confirmation of tax, interest and penalty

Legal framework: Claim to ITC is governed by GST provisions that permit availing credit subject to conditions; statutory provisions relevant to confirmed demand included interest under Section 50(3) and penalty under Section 74(1). Eligibility to avail ITC is linked to matching entries (e.g., GSTR-2A/GSTR-1 reconciliation) and to suppliers having filed the requisite returns.

Precedent treatment: The judgment does not cite or apply any prior judicial precedents; the Court considered the assessing authority's findings and the fresh order passed after remand.

Interpretation and reasoning: The assessing authority concluded that the petitioner failed to prove that suppliers had filed GSTR-1 for March 2019 and therefore the ITC items not reflected in recipient's GSTR-2A and not supported by supplier GSTR-1 could not be allowed. The Court records that out of surviving issues the authority confirmed demand only for the discrepancy of excess ITC as per GSTR-9 vis-à-vis GSTR-2A. The reasoning adopted by the authority is fact-based: absence of supplier return evidence defeats the statutory condition precedent for entitlement to ITC. The Court reviewed procedural course (remand and fresh order) but did not find procedural infirmity or error of law in the assessing authority's factual conclusion recorded in the impugned order.

Ratio vs. Obiter: Ratio - A recipient must demonstrate suppliers' compliance (e.g., filing of GSTR-1) when the ITC claimed is not reflected in GSTR-2A; failure to prove such compliance supports disallowance and confirmation of corresponding tax, interest and penalty under the GST provisions relied upon by the assessing authority. Obiter - No broader pronouncement on the extent of documentary proof required beyond the factual finding in the order.

Conclusions: The Court did not set aside the assessing authority's finding on this issue and accepted that the demand, as confirmed in respect of the specified ITC amounts, had been lawfully made based on absence of proof of supplier filings. No interference was warranted on merits in the writ petition.

Issue 2 - Use of Section 161 by the assessing authority to modify demand suo motu

Legal framework: Section 161 (mechanical/administrative/machinery provision in GST enactment permitting modification or rectification by authority) permits certain corrections/modifications by the tax authority to ensure correctness of orders.

Precedent treatment: The Court did not rely on or distinguish precedents concerning the scope of Section 161; it recorded that the assessing authority invoked Section 161 to partly modify the demand.

Interpretation and reasoning: The Court noted that the impugned order was suo motu modified under Section 161 and produced a tabulated revised demand (tax, interest, penalty totals). The modification did not, in the view of the Court, introduce any procedural infirmity that would render the order vulnerable to being quashed in exercise of writ jurisdiction. The modification was treated as part of the administrative exercise of the assessing authority and not as a nullity.

Ratio vs. Obiter: Ratio - Invoking Section 161 for administrative modification of a demand order does not, by itself, render the order liable to be set aside absent demonstrable procedural or legal infirmity. Obiter - The Court did not expound limits of Section 161 beyond observing its use in the facts.

Conclusions: The Court declined to disturb the modification effected under Section 161; no procedural defect arising from such modification was shown that warranted interference in the writ petition.

Issue 3 - Maintainability of writ petition where alternative appeal remedy exists and petitioner delayed numbering/processing of the writ petition

Legal framework: Constitutional writ jurisdiction under Article 226 is discretionary and is generally declined where an efficacious alternative statutory remedy (e.g., appeal) is available, unless exceptional circumstances exist. Procedural propriety and promptness in invoking extraordinary jurisdiction are relevant considerations.

Precedent treatment: No precedents were cited or applied; the Court applied established principle of declining writ relief when an alternative remedy exists and there is no procedural infirmity in the impugned order.

Interpretation and reasoning: The Court observed that an alternative remedy by way of appeal was available to the petitioner and that the writ petition was filed on 07.08.2025 but was numbered only on 13.10.2025. The Court found no discernible procedural infirmity in the impugned order and held that the attempt to obtain relief under Article 226 after delay could not be countenanced. The Court also noted that the petitioner had filed the writ petition only on the last date for condonation of delay in filing an appeal, indicating lack of urgency/exceptional circumstances to warrant writ relief.

Ratio vs. Obiter: Ratio - Where an effective appeal mechanism exists and no procedural irregularity in the impugned order is shown, writ jurisdiction will ordinarily be declined; delay in prosecution of writ petition reinforces the appropriateness of declining extraordinary relief. Obiter - No general prohibition is laid down; facts governed the exercise of discretion.

Conclusions: The writ petition was held not maintainable and was dismissed on this ground; the Court declined to adjudicate the merits in exercise of writ jurisdiction given availability of statutory appeal and lack of exceptional circumstances.

Issue 4 - Effect of payment of confirmed tax on pre-deposit requirement and further recovery pending appeal

Legal framework: Statutory appellate regimes often require pre-deposit for filing an appeal; courts may, in exercise of discretion, relax pre-deposit requirements where tax is already paid or for other reasons and regulate stay of recovery pending appeal.

Precedent treatment: None cited; Court applied pragmatic supervisory powers to facilitate appellate remedy.

Interpretation and reasoning: The Court recorded that the petitioner had paid the tax sum confirmed by the assessing authority (Challan dated 18.05.2025). On dismissal of the writ petition, the Court granted liberty to file the statutory appeal within 15 days and directed that no further pre-deposit be required as the tax amount had already been paid. The Court further directed that since the entire tax has been recovered, no further recovery shall be made pending final disposal of the appeal; conversely, failure to file appeal within stipulated time would permit respondent to proceed in the manner known to law.

Ratio vs. Obiter: Ratio - Payment of the confirmed tax can dispense with requirement of additional pre-deposit for filing appeal and justify a direction restraining further recovery pending appellate disposal where tax already stands recovered. Obiter - Practical directions about disposal on merits and hearing opportunity are contextual to the facts.

Conclusions: The Court denied writ relief but permitted an appeal within 15 days without requiring pre-deposit due to prior payment; it stayed further recovery pending disposal of the appeal filed within time and directed the Appellate Authority to decide on merits with opportunity of hearing.

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