Challenge to ITC Reversal not Entertained under Article 226: Madras HC Declines Interference with GST Order Confirming Demand [Read Order]

The Madras High Court, declined to interfere with an order confirming reversal of Input Tax Credit (ITC) and held that the assessee must pursue the statutory appellate remedy provided under the GST enactment.

The writ petition challenged an Order-in-Original that had confirmed the demand proposed in the show cause notice, primarily relating to reversal of ITC on account of non-payment of tax by the supplier.

The petitioner, Nandanee Steel Corporation represented by its proprietor Anil Kumar Indoria, contended that it had satisfied all statutory requirements under Section 16 of the GST law and was therefore entitled to retain the ITC.

The petitioner argued that it could not be penalised for the supplier's failure to remit tax to the Government. The respondent revenue defended the decision, submitting that the impugned order was comprehensive, well-reasoned, and reflected proper appreciation of statutory provisions and the petitioner’s replies.

Justice C. Saravanan, in his order, observed that the adjudicating authority had issued a detailed order after considering the legal provisions and the factual matrix, leaving no scope for interference under Article 226 of the Constitution. It reiterated that the writ jurisdiction could not be invoked when an effective alternative remedy was available under the GST statute. Noting that the petitioner ought to have approached the appellate authority, the Court directed the assessee to file an appeal before the Joint Commissioner (Appeals-I), Chennai-34.

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The High Court granted liberty to file the statutory appeal within thirty days from the date of receipt of the order, subject to a mandatory pre-deposit of fifty percent of the disputed tax amount.

Upon compliance, the appellate authority has been instructed to entertain the appeal on merits without reference to limitation. Failure to comply would result in the writ petition standing dismissed in limine, enabling the department to proceed with recovery as per the original order.

The writ petition was accordingly disposed of, and the connected miscellaneous petitions were closed.

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