2025 (11) TMI 669 - HC - GST

Order set aside and matter remitted for fresh Section 161 review of alleged duplicate ITC demand; consolidated appeal allowed

M/s. Nabati Food (India) Private Limited, Represented by its Managing Director Mr. Justin Samuel Versus The Assistant Commissioner of Central Tax & Central Excise, Audit I, Chennai, The Assistant Commissioner of GST & Central Excise, Chennai

HC set aside the impugned order and remitted the matter to the respondent authority to re-examine whether there is duplication of demand relating to ... Rejection of petitioner’s application seeking rectification of the order - excess Input Tax Credit (ITC) availed in GSTR-3B as compared to GSTR-2A - HELD THAT:- On perusal of the order dated 03.02.2025 passed for the tax period 2017–2018 to 2021–2022, it prima facie appears that there is a duplication of demand insofar as the excess ITC availed, when compared with the auto-populated input data under GSTR-2A, is concerned. This aspect ought to have been examined by the respondent under Section 161 of the respective GST Enactment, particularly when a specific request to that effect had been made by the petitioner on 27.05.2025. The impugned order dated 26.08.2025 is set aside, and the matter is remitted back to the respondent authority to reconsider the issue afresh in accordance with law. If, upon such reconsideration, an adverse order is passed against the petitioner, the petitioner shall be entitled to file a consolidated appeal within 30 days from the date of receipt of a copy of such order. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether the impugned assessment order under Section 73 of the GST enactment (dated 27.02.2025) involved duplication of demand having regard to an earlier order for the same period (dated 03.02.2025) insofar as excess Input Tax Credit (ITC) availed in GSTR-3B vis-à-vis GSTR-2A is concerned. 2. Whether the respondent was obliged to examine and, if necessary, rectify the impugned order under Section 161 of the GST enactment upon a specific rectification request dated 27.05.2025. 3. Whether the rejection of the rectification application (order dated 26.08.2025) without reconsideration was legally sustainable, and what remedial directions are appropriate if duplication or failure to consider rectification is prima facie established. ISSUE-WISE DETAILED ANALYSIS Issue 1: Duplication of demand in assessment orders Legal framework: Assessment and demand under Section 73 of the relevant GST enactment; classification of taxable demand arising from excess ITC availed in GSTR-3B as compared with GSTR-2A. Precedent Treatment: No prior judicial precedent was relied upon or considered in the judgment; the Court proceeded on the statutory scheme and the records before it. Interpretation and reasoning: On perusal of the two orders - the earlier order dated 03.02.2025 covering the composite period 2017-2018 to 2021-2022 and the later impugned order dated 27.02.2025 - the Court found prima facie that the amount representing excess ITC availed (recorded as Rs. 1,08,39,873/- in the earlier order and Rs. 1,08,28,252/- in the later order) appears to be duplicated between the two proceedings. The Court emphasised that where the same taxable incidence is subjected to two separate orders for the same period, the possibility of double demand must be examined by the assessing authority. Ratio vs. Obiter: Ratio - The Court's finding that there is a prima facie duplication of demand as to excess ITC is operative for the purpose of remittal; it forms part of the decision requiring reconsideration. Obiter - Observations on the numerical proximity of the two figures (and reference to 'apart from certain other issues') are incidental and not determinative beyond the remit to reconsider. Conclusions: There is a prima facie case of duplication of demand with respect to excess ITC that ought to be examined by the respondent authority. This finding justifies setting aside the rejection of rectification and remitting the matter for fresh consideration. Issue 2: Duty to examine rectification under Section 161 upon specific request Legal framework: Section 161 of the GST enactment confers power on the authority to rectify mistakes apparent from the record. The authority is required to consider specific rectification requests made by the assessee within the statutory scheme. Precedent Treatment: The Court did not cite or distinguish prior decisions; reliance was on the statutory duty to examine rectification requests where a specific ground is shown. Interpretation and reasoning: The petitioner filed a specific rectification application on 27.05.2025 seeking correction of the impugned order insofar as duplication was concerned. The Court held that the respondent ought to have examined this aspect under Section 161, particularly because the same subject-matter had been addressed in an earlier order. The rejection of the rectification application without such examination was therefore vulnerable to judicial review. Ratio vs. Obiter: Ratio - The Court's direction that the rectification application must be considered afresh under Section 161 is binding on the parties in this case. Obiter - The Court's general remark that the impugned order is 'detailed' and ordinarily not warranting rectification is an incidental observation and does not negate the duty to consider a specific rectification request when prima facie duplication exists. Conclusions: The respondent had a duty to consider the rectification request under Section 161 in light of the earlier order; failure to do so required setting aside the rejection and remitting the matter for reconsideration. Issue 3: Legality of the rejection of rectification and appropriate remedial directions Legal framework: Statutory appellate remedies under the GST scheme and powers of the writ court to quash administrative orders and remit for fresh consideration where statutory duty has not been performed. Precedent Treatment: No precedential reliance; the Court exercised supervisory jurisdiction on the record before it. Interpretation and reasoning: Given the prima facie duplication and the unexamined rectification request, the Court concluded that the order rejecting rectification (26.08.2025) could not stand. Rather than deciding the substantive correctness of the demand, the Court remitted the matter for fresh consideration so that the respondent may examine whether duplication of demand exists and take such action as lawful. Ratio vs. Obiter: Ratio - The direction to set aside the rectification rejection and remit for fresh consideration (including time limits for disposal and entitlement to a consolidated appeal) is dispositive and authoritative for the parties. Obiter - The Court's statement that the petitioner may otherwise pursue remedies before the Appellate Authority is consequential guidance, not a determination on merits. Conclusions: The rejection of the rectification application is set aside. The matter is remitted for reconsideration; if after reconsideration an adverse order is passed, the petitioner is entitled to file a consolidated appeal within 30 days from receipt of that order. Auxiliary directions and procedural consequences (operative conclusions) 1. The order rejecting the rectification application is quashed and remitted for fresh consideration under Section 161 within 30 days from receipt of the Court's order; the rectification application dated 27.05.2025 shall be considered and disposed of within that period. 2. If an adverse order results from such reconsideration, the petitioner is entitled to file a consolidated appeal against the demand confirmed by the impugned order and against other issues arising from the rectification decision within 30 days from receipt of the reconsidered order. 3. The Court exercised supervisory jurisdiction without addressing the substantive merits of the tax demand beyond finding a prima facie duplication that warrants re-examination; no costs were imposed.