Mb Amit Auto Sales And Spare Parts vs. Commissioner State Goods And Services Tax Commissionerate

Held

The Court held that the assessment order dated 09.04.2024, imposing tax, interest, and penalty, was not sustainable. The Court found substance in the Petitioner's contention that once the excess ITC was voluntarily reversed, the basis for the demand under Section 73 of the Act ceased to exist. The purpose of Section 73 is to address wrongful availment or utilization of credit. Where the discrepancy was neutralized by reversal prior to determination, the element of "undue benefit" or "retained credit" is extinguished, and no actual loss has occurred to the exchequer. The Court reasoned that the levy of interest under Section 50 and penalty under Section 122 are not attracted when the tax amount was never wrongfully retained or utilized, and the credit was restored voluntarily. The Court concluded that the substratum of the assessment order no longer survived for enforcement, as the Petitioner had neutralized the discrepancy prior to adjudication. The Court also noted that the appellate authority dismissed the appeal on limitation without examining the merits, which was also a point of contention for the Petitioner. The Court disposed of the writ petition with the observation that no coercive measures shall be taken by the Department in respect of the demand raised, as the alleged discrepancy stands reconciled and no outstanding dues remain payable.

Facts

The Petitioner, M/s Amit Auto Sales and Spare Parts, challenged two orders under the GST Act. The first was an assessment order dated 09.04.2024 by the Assistant Commissioner, State Tax, Tanakpur, imposing tax of ₹2,12,060, interest of ₹2,11,038, and penalty of ₹21,206 for the financial year 2018-19, due to alleged excess Input Tax Credit (ITC) claimed. The second was an appellate order dated 01.07.2025 by the Joint Commissioner (Appeals), Haldwani, which dismissed the Petitioner's statutory appeal as barred by limitation. The Petitioner contended that the delay in filing the appeal was bonafide and that the assessment order suffered from procedural and factual infirmities, as the alleged excess ITC had been voluntarily reversed in a subsequent return.

Key Issues

1. Whether the assessment order dated 09.04.2024, imposing tax, interest, and penalty, is sustainable when the alleged excess Input Tax Credit (ITC) was voluntarily reversed by the Petitioner prior to adjudication, thereby neutralizing the discrepancy and extinguishing the tax liability under Section 73 of the CGST/SGST Act? Petitioner's arguments: The Petitioner argued that the entire proceedings stemmed from a clerical mismatch between GSTR-3B and GSTR-2A for FY 2018-19, which was rectified in the April 2019 return. They contended that since the ITC was voluntarily reversed, there was no wrongful gain, suppression of facts, or intention to evade tax, rendering the imposition of interest under Section 50 and penalty under Section 122 unjustified. They also argued that the assessment order was passed mechanically without considering their reply in Form DRC-01A. Revenue's arguments: The judgment does not record specific arguments made by the Revenue in response to the Petitioner's contentions regarding the merits of the assessment order. The Revenue's stance was primarily reflected in the orders passed by the authorities.