Court Directs Re-Adjudication of ITC Claim Following Supplier's Tax Compliance
In a significant ruling, the Himachal Pradesh High Court has set aside an impugned order issued under Section 74 of the Central Goods and Services Tax Act, 2017, which had raised a demand against M/s Shivalik Containers Pvt. Ltd. for Input Tax Credit (ITC) claimed on account of non-payment of tax by its supplier. The order, dated January 4, 2023, which demanded Rs. 16,72,140 from the petitioner, has been quashed following the supplier's subsequent filing of returns and payment of due taxes with interest.
The Division Bench, comprising Justices Vivek Singh Thakur and Jiya Lal Bhardwaj, directed the Assistant Commissioner of State Taxes and Excise, Nahan, to re-open and re-adjudicate the matter as per the legal provisions. This decision came after the court was informed that the supplier, M/s Shivalik Marketing, had filed the necessary returns for the period from February 2020 to March 2020, making the ITC available to the petitioner.
The court's directive comes in response to the argument presented by the petitioner's counsel, Mr. Vishal Mohan, who contended that the order was unsustainable given the supplier's compliance. The Additional Advocate General, Mr. Sushant Keprate, representing the respondents, acknowledged the supplier's delayed compliance but asserted that the notice was rightly issued given the circumstances prior to the tax deposit.
The judgment reflects the court's intent to ensure that procedural fairness is upheld and that the adjudicating authority revisits the ITC claim in light of the new developments. The court has mandated that the necessary actions be completed by January 31, 2026.
This case underscores the importance of timely compliance with tax obligations and the legal recourses available to businesses in addressing disputes under the CGST framework.
Bottom Line:
Impugned order under Section 74 of the CGST Act, 2017 raising demand for ITC claimed by petitioner set aside - Directions issued to adjudicating authority to re-open the issue, re-adjudicate the matter, and determine liability or accept the claim as admissible under law.
Statutory provision(s): Central Goods and Services Tax Act, 2017, Section 74
