2026-VIL-384-P&H
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SGST High Court Cases

GST - Failure to reverse input tax credit availed on supply of exempted goods. Dropping of proceedings based on reply and supporting documents. However, for the subsequent financial year, the Department issued another SCN raising the same issue. The petitioner again submitted detailed replies along with reconciliation of ITC reversal, but the impugned order was passed confirming the demand, stating that the matter was "sub-judice" on merits regarding applicability of ITC reversal - Whether the impugned order was passed without application of mind and proper consideration of the replies and submissions made by the petitioner – HELD - The impugned order suffered from complete non-application of mind. The department had earlier dropped the proceedings for the previous year after considering the petitioner's reply and perusing its books of accounts, indicating that the matter was not "sub-judice" on merits. However, the impugned order did not provide any cogent reasons for not accepting the petitioner's replies and merely stated that the matter was "sub-judice" without any explanation – There is not even a whisper as to the basis on which respondents came to the finding that the matter was “sub-judice” on merits especially when it was not disputed that after considering the reply, the department chose not to proceed against the petitioner firm in respect of the demand raised for financial year 2020-21 - Further, the order did not address the reconciliation provided by the petitioner or the circulars relied upon to support its argument regarding taxable supplies - The impugned order is unreasoned and passed without any application of mind, accordingly, the same is set aside - the writ petition is disposed of
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