HC Quashes ITC Demand Notice Used for Overstated Liability but Later Reclaimed

Case Details: Instakart Services (P.) Ltd. v. Sales Tax Officer - [2023] 151 taxmann.com 192 (Delhi)

Judiciary and Counsel Details

• • Vibhu Bakhru & Amit Mahajan, JJ.
  • Tarun Gulati, Kishore Kunal, Manish Rastogi & Runjhun Pare, Advs. for the Petitioner.
  • Rajeev Aggarwal & Manbhar Mittal, Advs. for the Respondent.

Facts of the Case

In the instant case, the assessee had erroneously typed its tax liability as Rs. 32.33 crore instead of Rs. 3.23 crore in its monthly return for September, 2017. The liability was discharged by using available balance of ITC of Rs. 29.10 crore which assessee claimed as an apparent error. The department issued show cause notice due to mismatch in FORM GSTR-2A and FORM GSTR-3B.

The assessee stated that there was no defined mechanism to rectify submitted FORM GSTR-3B, filed for September, 2017 and ITC that was used for discharging overstated liability was reported in its monthly return filed for October, 2017. However, the department raised demand notice with interest. It filed writ petition against the demand notice.

High Court Held

The Honorable High Court noted that if there was an inadvertent or typographical error that had crept in any returns, taxpayer cannot be mulcted with tax liability in excess of what is due and payable. It was apparent in the instant case that the explanation provided by assessee had not been considered. Therefore, it was held that the impugned show cause notice demanding tax with interest was liable to be quashed.