Wrongful availment of Input Tax Credit allowed amnesty relief where tax deposited; appeal to be heard on merits without limitation.

Wrongful availment of input tax credit contrary to Section 16 and invocation of amnesty under Section 128A read with Notification 21/24-Central Tax where proceedings were initiated under Section 74: the applicant having deposited the entire tax amount prior to filing the amnesty application was permitted to challenge the assessment before the appellate authority within 30 days, and such challenge must be considered on merits without reference to limitation; recovery proceedings are to be kept in abeyance for six months from receipt of the order. Petition disposed accordingly.

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Issues: (i) Whether the Petitioner who has deposited the disputed tax can be permitted to challenge the assessment order dated 28.11.2023 before the Appellate Authority notwithstanding prior rejection of an amnesty application; (ii) Whether recovery proceedings ought to be kept in abeyance pending disposal of such challenge.

Issue (i): Whether the Petitioner may be permitted to challenge the assessment order before the Appellate Authority despite earlier rejection of the amnesty application.

Analysis: The Petitioner had deposited the disputed tax amount on 03.05.2024 and thereafter filed an application seeking amnesty under Section 128A and Notification No.21/24 - Central Tax dated 08.10.2024 which was rejected by the authority on the ground that proceedings were under Section 74. The Court recorded submissions regarding references to Section 73 in the detailed order and the respondent's explanation of a typographical error, and proceeded to grant procedural relief by permitting the Petitioner to challenge the assessment before the Appellate Authority within a specified short period. The Appellate Authority was directed to consider and dispose of any such appeal on merits and in accordance with law as expeditiously as possible without reference to limitation.

Conclusion: In favour of the Petitioner. The Petitioner is granted liberty to file an appeal against the assessment order within 30 days from receipt of the order and the Appellate Authority shall consider and dispose of the appeal on merits without reference to limitation.

Issue (ii): Whether recovery proceedings should be kept in abeyance pending the challenge before the Appellate Authority.

Analysis: Having granted liberty to challenge the assessment and noting the deposit of the disputed tax, the Court exercised its supervisory jurisdiction to preserve the status quo by directing that all recovery proceedings be kept in abeyance for a defined period to enable the appellate process to be invoked and concluded.

Conclusion: In favour of the Petitioner. All recovery proceedings are kept in abeyance for six months from the date of receipt of a copy of the order.

Final Conclusion: The Court granted limited and procedural relief to the Petitioner by permitting an out-of-time appeal against the assessment order to be filed within a short period and by staying recovery for six months; the substantive assessment and related penalties were not set aside and remain open to challenge before the Appellate Authority.

Ratio Decidendi: Where the disputed tax has been deposited, a court may permit the assessee to challenge an assessment by granting liberty to file an appeal and keep recovery proceedings in abeyance for a limited period so that the appellate authority can decide the matter on merits without being inhibited by limitation.

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