Delayed GST ITC Claim: Karnataka HC Holds Reply to SCN Not Necessary when Records available with Dept [Read Order]

The Court stated that the availability of records with the department meant that the adjudicating authority had sufficient material to verify the claim and pass an informed order, irrespective of whether the petitioner filed a reply.

M/s Sri Nanjundeshwara Traders challenged an adjudication order dated 26 August 2024, passed under Section 73(9) of the KGST and CGST Acts for the period April 2019 to March 2020. The issue is about the ITC that was claimed belatedly.

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The petitioner argued that ITC pertaining to the year 2018-19 had been claimed in 2019-20, largely under the Reverse Charge Mechanism (RCM).

The authorities, however, failed to consider the available records and disallowed the credit, mainly on the ground that the petitioner had not replied to the show-cause notice.

Justice Suraj Govindaraj observed that the issue had already been examined in M/s NL Tile Art Pvt. Ltd. v. Commissioner of Commercial Taxes, Karnataka & Ors., decided the same day, where the Court held that in cases of delayed ITC claim, annual returns should be reconciled before arriving at conclusions.

The court, applying the same principle, held that the reconciliation of ITC claims can be carried out based on documents already available with the department, and such reconciliation does not mandatorily require a reply from the taxpayer.

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Consequently, the adjudication order was quashed, and the matter was remitted back to the Commercial Tax Officer for fresh consideration. The bench also directed the petitioner to appear before the authority on 21 August 2025 and submit their reply, though reiterating that reconciliation ought to be based on departmental records.

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