Issue on Availing ITC on Sweetmeat Shop: Delhi HC Directs to File Appeal before Appellate Authority [Read Order]

The Delhi High Court, in the case of the issue of availing Input Tax Credit (ITC) on sweet meat shop , directed the assessee to file an appeal before the appellate authority.

The Petitioner, M/s Lala Shivnath Rai Sumerchand Confectioner Private Limited, inter alia, challenging the Show Cause Notice dated 05th August, 2025 (‘SCN’) and Orderin-Original (‘impugned order’) for the Financial Year 2017-18.

The short question that arises in the present petition is that the Petitioner runs a sweetmeat shop and a restaurant which is accompanying the same with about 30 persons seating. The SCN has been issued on the ground that a restaurant cannot avail of Input Tax Credit ( ‘ITC’) as the GST charged on restaurants is only 5%. However, in the sweetmeat shop, the GST charges are higher.

The case of the Petitioner is that the sweetmeat shop is permitted to avail of the ITC and therefore, the SCN is untenable. Mr. Gupta, Counsel for the Petitioner has pointed to the Court that there is a double demand which has been raised in the matter firstly by utilizing the ITC availed of and secondly, by not allowing the ITC which has been availed of. According to the Petitioner, amounts to duplication and calling for payment of the same amount twice over. Ms. Benjamin, SSC for the Respondent submitted that the impugned order is an appealable order.

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A division bench of Justice Prathiba M.Singh and Justice Rajneesh Kumar Gupta viewed that there would be duplication of two demands as demand qua reversal of availed ITC and demand qua utilisation of ITC would be one and the same thing. But both have been separately demanded in the impugned order. Accordingly, in the peculiar facts of the case, the Petitioner is relegated to the Appellate Authority. However, the predeposit shall be only in respect of demands under paragraphs (ii), (iii) & (iv) of the operative part of impugned order.

The appeal is permitted to be filed by 15th July, 2025 along with the requisite pre-deposit. If any deposits have already been made by the Petitioner, adjustment thereof shall be given qua the pre-deposit. If the same is filed within the time stipulated, the appeal shall be heard on merits and shall not be dismissed on the ground of being barred by limitation.

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