Expiry of limitation for appeal and reversal of input tax credit resulting in remand with deposit requirement

Expiry of limitation for filing an appeal was central to a challenge against reversal of input tax credit where the claimant failed to substantiate rightful availing and was alleged to have relied on supplier invoices that were fake; because the statutory appeal period had lapsed, the matter was remitted for fresh adjudication on merits subject to an interim compliance regime requiring the taxpayer to deposit a percentage of disputed tax (here 25% payable from the electronic cash register within 30 days) before reconsideration.

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Issues: Whether, in view of delay in approaching the Court and availability of documents to substantiate receipt of supply, the impugned order confirming reversal of input tax credit should be quashed and the matter remitted to the assessing authority for fresh adjudication subject to a pre-deposit condition and related ancillary directions.

Analysis: The Court examined (i) the expiry of the statutory limitation for filing an appeal under Section 107 of the GST enactments, (ii) the petitioners assertion of possession of documents to substantiate actual receipt of supply and entitlement to input tax credit, and (iii) precedent practice of balancing assessee and revenue interests by requiring pre-deposit ranging from 25% to 100% depending on delay where matters are remitted for fresh consideration. The Court required the petitioner to make a 25% deposit of the disputed tax from the electronic cash ledger and to file a substantive reply treating the impugned order as an addendum to the show cause notice; on compliance, the assessing authority is directed to pass a fresh order on merits within a specified timeframe and to lift bank attachment conditionally.

Conclusion: The impugned order is quashed insofar as it relates to confirmation of demand, and the matter is remitted to the Respondent for fresh adjudication on merits provided the Assessee deposits 25% of the disputed tax from the electronic cash ledger within thirty days and files the requisite reply; upon such compliance the Respondent shall pass a final order on merits preferably within three months and the bank attachment shall stand vacated; failure to comply permits the Respondent to proceed as if the writ petition were dismissed.

Ratio Decidendi: Where an appeal period has lapsed but the assessee possesses documents to substantiate entitlement to input tax credit, a court may quash and remit the matter for fresh adjudication while protecting revenue interests by mandating an equitable pre-deposit proportionate to delay and conditioning release of attachments on such deposit.

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