2026-VIL-700-ORI
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SGST High Court Cases

GST – Levy of Interest and penalty on delayed reversal of input tax credit on exempt goods, Manner of Pre-deposit where there is defect in recording of figures in the Order-in-Original - Upon Audit, the petitioner reversed the wrongly availed credit but the Adjudicating Authority raised demand towards interest for delayed reversal and imposed penalty. The Adjudicating Authority wrongly classified the interest demand under the head Tax instead of Interest in the adjudication form - The Appellate Authority affirmed the order but failed to rectify this defect, expressing inability to rectify its own order as the period of limitation under Section 161 had already lapsed - Petitioner contend that it would be required to deposit percentage of remaining amount in dispute for filing appeal before the Appellate Tribunal, and the online system would not allow filing without such pre-deposit based on the wrongly classified amount – HELD - The disputed question of fact is to be settled by the fact-finding authorities in terms of provisions of the GST Act and the wrong claim of input tax credit stated to have been restored by way of disclosing in DRC and Form GSTR-3B is required to be verified and examined by the authorities. Further, the GST Appellate Tribunal could adjudicate the correctness of demand raised by levying interest and legal justification to impose penalty by instituting proceeding under Section 73 of the GST Act. However, serious prejudice would be caused if the petitioner is relegated to approach the GSTAT as there is no provision for the Appellate Authority to recall the Order-in-Appeal as the appeal has been rejected on merit - The Court is compelled to interfere with the order of the Appellate Authority as, if the Petitioner is directed to avail the alternative remedy available under Section 112, justice would not be subserved. The bare perusal of the Show Cause Notice, Order-in-Original and the Order-in-Appeal clearly evince that the demand of reversal of input tax credit, interest and penalty raised in the Order-in-Original has been confirmed in the appeal. The Appellate Authority being not in a position to rectify such mistake, attempts to file appeal before the Appellate Tribunal would be futile inasmuch as the online system would not allow the Petitioner to do so without pre-deposit being made. Therefore the Order-in-Appeal is set aside and the matter is remitted to the Appellate Authority for deciding the appeal on merit afresh without being swayed away by earlier order and pass appropriate order in accordance with law after hearing the Petitioner – The petition is disposed of
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