GST ITC denied on Non-Compliance of Circular: Madras HC grants Hearing Opportunity Conditionally [Read Order]

In a recent ruling, the Madras High Court set aside an order, wherein the input tax credit ( ITC ) claimed by the petitioner/ assessee under the Goods and Services Tax ( GST ) Act was denied due to non-compliance with Circular.

The petitioner, Bahadur Gajendra Kumar Jain Proprietor of B.M.Fabrics had challenged the impugned order primarily on the ground that their responses to the show cause notice were not duly considered.

It was submitted that the petitioner had responded on 27.01.2024 and had also appeared in person before the tax authorities. However, they were allegedly provided with very limited time to present all relevant material and submissions.

Also read: GST Notification issued u/s 168A and Related G.O.(M) is Valid: Madras HC Dismisses Petition [Read Order]

Appearing for the GST department, Mr. T.N.C. Kaushik, Additional Government Pleader, contended that multiple opportunities were extended to the petitioner, as reflected in the order. He submitted that the ITC was denied solely on the ground of the petitioner’s failure to comply with GST Circular No.183/2022, which mandates reconciliation of discrepancies between GSTR-3B and GSTR-2A returns.

Got a GST ITC Notice? Read This Before You Reply - Click Here

During the hearing, the petitioner’s counsel expressed willingness to comply with the requirements of the said circular and requested a fresh opportunity to present the necessary documentation. The petitioner also volunteered to deposit 25% of the disputed tax demand as a condition for remand.

Justice Senthilkumar Ramamoorthy, considering the circumstances and the petitioner’s readiness to comply, held that a fresh opportunity ought to be provided, albeit conditionally.

Accordingly, the impugned order was quashed and the matter was remanded to the respondent authority for reconsideration, on the condition that the petitioner remits 25% of the disputed demand within four weeks from the date of receipt of the order.

Also read: Refund Appropriation Against CGST Arrears Without Hearing Violates Natural Justice: CESTAT Directs Fresh Adjudication [Read Order]

To Read the full text of the Order CLICK HERE

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