M/S Spectrum Tool Engineers Private Limited vs. The Additional Commissioner Of Commercial Taxes

Facts

The appellant, M/s. Spectrum Tool Engineers Private Limited, is challenging orders related to input tax credit claims for the tax periods April 2014 to March 2015 and April 2013 to March 2014. The department disallowed input tax credit after noticing that selling dealers declared nil turnovers for the periods of purchase. Initially, reassessment proceedings were dropped. However, the Deputy Commissioner later rectified this order, disallowing the input tax credit. The Joint Commissioner (Appeals) allowed the credit, but the Additional Commissioner initiated suo-moto revision, setting aside the appeal order and restoring the rectification order. The assessee's subsequent request for rectification of the revision order was rejected, leading to these appeals.

Held

The Court held that the documents produced by the assessee via memo dated 10.09.2026 require examination in light of the principles laid down in STATE OF KARNATAKA VS M/S ECOM GILL COFFEE TRADING PVT. LTD. (2023) 18 SCC 809. However, the High Court, in appeal, is not the appropriate forum for a fact-finding exercise to decide the entitlement to input tax credit based on documents produced for the first time. Therefore, the Court deemed it appropriate to remand the matter back to the respondent No.2 (Deputy Commissioner of Commercial Taxes) to peruse these documents and take a decision on the assessee's entitlement to input tax credit. The impugned orders dated 11.08.2025 and 01.04.2025 were set aside, and the matter was remanded for fresh consideration within three months.

Key Issues

1. Whether the Additional Commissioner erred in setting aside the order of the Joint Commissioner (Appeals) and restoring the rectification order, thereby disallowing the input tax credit claimed by the assessee? 2. Whether the assessee is entitled to input tax credit based on the documents produced before the High Court? Petitioner's Arguments: The assessee's counsel submitted additional documents (ledger extracts, bank statements, sample invoices, e-sugam) to demonstrate the genuineness of transactions with selling dealers, arguing that the Additional Commissioner erred in declining the input tax credit. The assessee requested a remand to the prescribed authority (respondent No.2) to peruse these documents and examine their genuineness. Revenue's Arguments: The learned Additional Government Advocate submitted that none of the documents produced by the assessee before the High Court were placed before the respondent No.2.