2026-VIL-606-KAR
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SGST High Court Cases

GST - Inadvertent error in availing Input Tax Credit - Voluntary Reversal - Rectification of Assessment Order – Petitioner inadvertently availed excess Input Tax Credit amounting to a specified sum under the IGST column in December 2017. Upon noticing the mistake, the assessee voluntarily reversed the entire credit in July 2019 - Authorities passed an assessment order demanding recovery of the excess Input Tax Credit. The assessee's application for rectification was rejected by the authority on the ground that the request did not satisfy the conditions necessary to exercise rectification jurisdiction - Whether an assessment order demanding recovery of excess Input Tax Credit claimed inadvertently is valid when the assessee claims to have voluntarily reversed the entire credit without utilization, notwithstanding the assessee's failure to respond to the notice and show cause proceedings – HELD - Although the assessee failed to respond to the initial notices served under the GST procedure, the circumstances of the case warrant interference with the assessment order. The assessee's defense is premised on the claim that the excess availment was purely procedural and clerical in nature occurring at the nascent stage of GST implementation without any revenue implication or mala fide intent, and that the credit was voluntarily reversed without being utilized for any tax discharge or refund. The tax authority did not have an occasion to verify whether there was a bona fide error which was rectified voluntarily because the assessee did not respond to the statutory notices, but such verification could be undertaken if the assessee is given a fresh opportunity. If an opportunity as contemplated under Section 75(4) is extended, the assessee could demonstrate the inadvertent error and the voluntary reversal - The assessment order is quashed and the proceedings are restored to the tax authority with an opportunity to the assessee to file a detailed response with all supporting documents – The petition is disposed of
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