The Delhi High Court annulled the Goods and Services Tax (GST) demand orders issued against a taxpayer for improperly claiming Input Tax Credit (ITC) in their GSTR-3B, as compared to the ITC reflected in GSTR-2A. The court observed that the disputed ITC had been reversed before the issuance of the show cause notice (SCN).
A writ petition has been submitted by Harsh Khanna and Sons HUF contesting an order-in-original and order-in-appeal passed against them by the revenue department under the Central Goods and Services Tax Act, 2017. The applicant contested the validity of Notifications 9/2023-central tax and 56/2023-central tax as arbitrary, unreasonable and ultra vires the CGST Act.
U/s 73 of the CGST Act, 2017, the applicant was subject to SCN proposing a total demand of ₹45,81,000 for the FY 2018-19 for allegedly availing excess ITC of ₹41,41,731, claimed in GSTR-3B as compared to the ITC available in GSTR-2A.
Thereafter, an order-in-Original confirming the demand and recovery measures of the disallowed ITC of ₹41,41,731 was passed, including an additional demand of Rs 5,606 towards tax difference, along with the penalties of ₹4,14,173 and ₹20,000 with applicable interest.
The appellate authority appeal provided relief by forgoing the additional demand of Rs 5606 while keeping the rest of the demand.
Akhil Krishan Maggu, before the HC, mentioned that the applicant had reversed the questioned ITC and claimed under the appropriate head before the issuance of the SCN. The Bench mentioned that the Department Counsel Pranay Mohan Govil validated and confirmed that the submission of the applicant for the prior reversal of the ITC was factually appropriate.
The Division Bench of Justice Nitin Wasudeo Sambre and Justice Ajay Digpaul stated that the same claim had been raised before the appellate authority, but was denied earlier for the desire of documentary evidence. But, after the confirmation of the revenue before the HC, the ITC reversal was confirmed.
Subsequently, the HC quashed and set aside the impugned order-in-original and the order-in-appeal and remanded the case back to the adjudicating authority for fresh consideration, asking it to again analyse the issue under the confirmed position for the prior ITC reversal.
Read Also: How GST Software Handles Input Tax Credit (ITC) Tracking
No opinion is mentioned by the court on the merits of the case.
| Case Title | M/S Harsh Khanna and Sons HUF vs Union OF India |
| Case No. | W.P.(C) 4900/2025 & CM APPL. 22530/2025 |
| For Petitioner | Mr. Akhil Krishan Maggu, Mr. Vikas Sareen, Ms. Oshin Maggu, Mr. Aryan Nagpal, Ms. Mehak Sharma, Advs. |
| For Respondent | Mr. Pranay Mohan Govil, SSC for R-1 & R-2 |
| Delhi High Court | Read Order |
