Matter Remanded as Entire ITC Was Disallowed Despite the SCN Mentioning an Excess Claim of ITC for a Lesser Amount | HC

Case Details: Sri Kaleeswari Stores v. Assistant Commissioner - [2024] 169 taxmann.com 22 (Madras)

Judiciary and Counsel Details

• Mohammed Shaffiq, J.
• M. Varun Pandian for the Petitioner.
•  R. Sureshkumar, Addl. Govt. Pleader for the Respondent.

Facts of the Case

The assessee was a partnership concern, engaged in the sale of home appliances, vessels, and utensils. For the year 2019-20, an audit was conducted, and audit slips were issued pointing out various defects. The assessee furnished a suitable reply to the audit department.

Subsequently, a show-cause notice was issued to the assessee for disallowing input tax credit (ITC) on various grounds. While passing the order, the proper officer disallowed the ITC claimed to the extent of Rs. 1.13 crore, whereas in the show-cause notice, it was mentioned that ITC to the extent of Rs. 97 thousand was in excess. The assessee filed writ petition against the reversal of whole ITC.

High Court Held

The Honorable High Court noted that the notice issued in DRC-01 provided that there was excess claim of ITC to the extent of Rs. 97,010, however while passing impugned order, entire ITC claimed was disallowed. The High Court also noted that the show-cause notice forms the foundation of the order, and an order that traverses beyond the show-cause notice results in the violation of the principles of natural justice. Therefore, the Court held that the impugned order was beyond the scope of the notice and liable to be set aside and matter was remanded.

List of Cases Referred to

• CCE v. Champdany Industries Ltd. (2009) 9 SCC 466 (para 6),
• CCE v. GAIL (2007) 15 SCC 91 (para 6)
• CCE v. Ballarpur Industries Ltd. (2007) 8 SCC 89 (para 6).