Input tax credit claimed by mistake and later reversed requires fresh adjudication after the taxpayer's detailed response.

Input tax credit was alleged to have been wrongly claimed in the IGST column, but the petitioner asserted that the error was inadvertent, the credit was later voluntarily reversed, and it was neither utilised nor refunded. The HC held that these facts required reconsideration because the petitioner had not effectively placed its defence in the earlier proceedings. It interfered with the adjudication order and the rejection of rectification, and restored the matter to the adjudicating authority so the petitioner could file a detailed response with supporting documents and the authority could decide afresh whether liability could still be fastened.

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Issues: Whether the adjudication order and the endorsement rejecting rectification deserved interference, and whether the proceedings should be restored to the adjudicating authority with an opportunity to file a detailed response.

Analysis: The petitioner's case was that input tax credit had been availed by inadvertent mistake in the IGST column and was later voluntarily reversed, without utilisation or refund, and that the defence was not considered because no effective response was filed to the notice and show-cause proceedings. The Court found that the matter required reconsideration on these facts and that the petitioner should be permitted to place a detailed response with documents so that the authority could examine whether the alleged excess availment was an inadvertent claim that had been voluntarily reversed and whether liability could still be fastened.

Conclusion: The impugned adjudication order and rectification rejection were interfered with, and the proceedings were restored to the adjudicating authority for fresh consideration after receipt of the petitioner's response.

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