Excess availment of Input Tax Credit on imports and reversal for supplier non-filing; remand with conditional reconsideration.

Dispute concerns excess availment of input tax credit (ITC) on imported goods due to uncertified proof of IGST payment; customs authorities were directed to file affidavits confirming IGST payment for specified bills, and the matter was remanded to the appellate authority to reconsider ITC availment in light of those reports. Separate issue concerns reversal of ITC owing to suppliers' failure to file returns; petitioners failed adequately to explain missing earlier representation, so the appellate authority may reconsider reversal only if petitioners pay specified costs and furnish proof before that authority.

---

---

Issues: (i) Whether the appellate authority's finding of excess availment of Input Tax Credit (ITC) on import of goods is sustainable in view of non-reflection of IGST in the GST portal arising from manual processing of Bills of Entry; (ii) Whether the petitioners can be held liable to reverse ITC solely because their suppliers failed to file returns.

Issue (i): Whether the appellate authority's observation on excess availment of ITC on import goods remains valid given evidence regarding manual Bills of Entry and subsequent post-facto entry of "Out of Charge" in ICES resulting in non-reflection of IGST in the GST portal.

Analysis: Affidavit and supplementary report from customs explain that non-reflection of IGST on the GST portal arose from manual processing and lack of contemporaneous electronic "Out of Charge" entries in ICES, not from non-payment of IGST. Customs coordinated with the petitioners; post-facto documents were verified and "Out of Charge" entries were recorded in ICES for five Bills of Entry and subsequently for all eight Bills of Entry with corresponding reflection on the GST portal.

Conclusion: The appellate authority's observation on excess availment of ITC on import goods is set aside and the matter is remanded to the appellate authority to reconsider the issue in light of the customs reports and the documents to be produced by the petitioners.

Issue (ii): Whether reversal of ITC is warranted solely because the petitioners' suppliers failed to file returns.

Analysis: The petitioners missed the opportunity to represent their case before the appellate authority and have not satisfactorily explained that failure. The appellate authority's conclusion on reversal of ITC for supplier non-filing may be re-examined but the petitioners' right to agitate the point before the appellate authority is made conditional on payment of costs.

Conclusion: The appellate authority's conclusion regarding reversal of ITC due to suppliers' non-filing is permitted to be reconsidered, but the petitioners may present their response before the appellate authority only upon payment of costs of Rs.15,000 to the High Court Legal Services Committee and furnishing proof within two weeks.

Final Conclusion: The matter is partly allowed by setting aside the appellate observation on excess availment of ITC on import goods and remanding that issue for fresh consideration in light of customs reports; the challenge to reversal of ITC for supplier non-filing is permitted to be reconsidered subject to payment of costs by the petitioners.

Ratio Decidendi: Where non-reflection of IGST on the GST portal is attributable to manual processing and absence of system-recorded "Out of Charge" rather than non-payment of IGST, an appellate authority must re-examine ITC availment claims in light of authenticated customs records and post-facto entries before sustaining any disallowance of ITC.

---