The Delhi High Court in a recent ruling ,upheld an order confirming the demand of Rs. 34,92,903 for Input Tax Credit (ITC) wrongfully availed by the assessee, due to the failure to file a reply or submit documents.
Pret Study By Janak Fashions Private Limited,petitioner-assessee, filed a petition under Article 226 of the Constitution of India to quash an order dated 28th January, 2025. The order confirmed a demand of Rs. 34,92,903/- for Input Tax Credit availed without receiving goods, along with penalty and interest.
The assessee’s grievance was that personal hearings were scheduled for 13th, 14th, and 15th January, 2025. The counsel joined the link on 15th January at 12:00 PM but was not allowed access to the hearing.
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The record showed that two show-cause notices were issued, on 22nd July, 2022, and 3rd August, 2024. No reply was filed to the notice dated 3rd August, 2024, even after a hearing notice was sent on 8th January, 2025.
The petitioner, sought to join the personal hearing on 15th January, 2025, to request an extension. The hearing was scheduled for 13th, 14th, and 15th January, 2025. The petitioner’s counsel emailed to join on the 15th but did not file a reply to the show-cause notice, nor did they make any effort to submit documents. The order was passed on 28th January, 2025, nearly two weeks after the hearing.
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The order confirmed the demand of Rs. 34,92,903/- for wrongly availed Input Tax Credit, along with interest and a penalty. A penalty of Rs. 25,000/- was also imposed on the director of the company, Sh. Ayush Mehra.
The division bench of Justice Prathiba M.Singh and Justice Rajneesh Kumar Gupta found the order appealable under Section 107 of the CGST Act, 2017. Since the petitioner had not been diligent in attending hearings, the Department was not at fault.
The petition was disposed of, allowing the petitioner to appeal within 30 days, with the appellate authority deciding the appeal on merits if filed in time.
In short ,the petition was disposed.
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