HC Directed Dept. to Provide Opportunity to Assessee to Establish Non-Availment of ITC on Cancelled Invoices

Case Details: Sidhivinayak Marketing v. Deputy Commercial Tax Officer - [2024] 162 taxmann.com 530 (Madras)

Judiciary and Counsel Details

• Senthilkumar Ramamoorthy, J.
• Ms C. Rekha Kumari for the Petitioner.
• V. Prashanth Kiran, Govt. Adv. (Tax) for the Respondent.

Facts of the Case

The petitioner was engaged in buying and selling domestic appliances. One of the suppliers issued invoices in November 2018 and thereafter cancelled the same by issuing credit notes. The department issued order demanding tax based on scrutiny of GSTR-2A. It filed writ petition and contended that ITC was not availed on invoices later cancelled by supplier through credit notes and correct ITC was reported in GSTR-3B. It was also submitted that the petitioner was unaware of proceedings since such show cause notice was uploaded on the GST portal in the “View Additional Notices and Orders” tab, but not communicated to the petitioner through any other mode.

High Court Held

The Honorable High Court noted that the tax proposal arose out of a scrutiny of the GSTR-2A and upon noticing issuance of credit notes by supplier. The petitioner has placed on record the GSTR-3B returns for the relevant month to establish that the petitioner did not avail of ITC in respect of purchases from supplier.

Therefore, the Court held that the matter would be remanded to the department for reconsideration and the petitioner would be provided an opportunity to submit a reply to the show cause notice. The Court also directed department to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of the petitioner’s reply.