Delhi High Court Sets Aside GST Orders and Remands Matter for Fresh Adjudication on Input Tax Credit Reversal

Background: The petitioner challenged two Central Government notifications and orders passed under the Central Goods and Services Tax Act, 2017, including an order-in-original and an order-in-appeal that disallowed input tax credit (ITC) and imposed related demands and penalties. The dispute arose from a show cause notice issued under Section 73 of the CGST Act, alleging excess ITC claimed in GSTR-3B compared to GSTR-2A for the financial year 2018-2019.

Proceedings and Submissions: The original adjudicating authority upheld the demand, disallowing ITC of ₹41,41,731/-, imposing a further tax liability, penalties, and interest. The appellate authority partially allowed the appeal, waiving only a minor portion of the demand. During the High Court proceedings, the petitioner asserted that the relevant ITC had already been reversed and claimed under the correct head before the issuance of the show cause notice. The Court directed the respondent to verify this claim.

Court’s Reasoning and Decision: On the next hearing, counsel for the respondent confirmed the accuracy of the petitioner’s submission regarding the ITC reversal. The Court noted that although this ground had been raised before the appellate authority, it was previously rejected for lack of documentary evidence. In light of the respondent’s confirmation, the High Court quashed and set aside the impugned orders dated 24.04.2024 and 17.01.2025.

The Court allowed the petition to the extent of setting aside these orders and remanded the matter to the relevant adjudicatory authority for fresh consideration, specifically in view of the confirmed statement regarding ITC reversal. The authority was directed to decide the matter expeditiously, and in any case within twelve weeks from the petitioner’s appearance.

Clarification: The High Court expressly stated that it had not made any findings on the merits of the petitioner’s case, limiting its intervention to the procedural aspect arising from the respondent’s confirmation.

Conclusion: The judgment underscores the importance of considering material facts and admissions during adjudication under the GST regime. The remand ensures that the petitioner’s claim of ITC reversal prior to the show cause notice is properly evaluated by the adjudicatory authority, with the High Court refraining from expressing any opinion on the substantive merits of the dispute.