2026-VIL-1226-ALH
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SGST High Court Cases

GST - Remand by the FAA to the proper officer for fresh determination under Section 73(9) after recording findings in favour of the Petitioner-purchaser - Denial of Input Tax Credit under Section 16(2)(c) for non-deposit of tax by suppliers - Petitioner claimed Input Tax Credit on inward supplies from registered suppliers who had nil credit in the return and had not deposited the tax - Proper officer denied the credit by an order under Section 74(9) raising tax, interest and penalty - FAA recorded that the Petitioner produced tax invoices, e-way bills, bilties, kanta parchi, purchase ledger and banking channel payment proof, that the supplies were reflected in the returns and that both suppliers were effectively registered on the dates of supply, but still disallowed credit on two supplies and directed the proper officer to proceed under Section 73(9) - Petitioner contended that the FAA has no power of remand under Section 107(11) and cannot mechanically direct action under a particular provision - Whether the direction to determine tax, interest and penalty afresh under Section 73(9) can stand and the manner in which the proper officer is to decide the matter - HELD - The purchaser had discharged his obligation by paying the tax and filing returns, while the suppliers submitted returns but did not deposit the tax. The FAA, after evaluating the evidence, found in favour of the Petitioner and found no element of fraud, so there was no occasion to proceed under Section 74 - Section 16(2)(c) cannot be invoked as a standalone provision or in a routine and mechanical manner, and the proper officer must independently apply his mind to the facts of each case. Counsel for the Petitioner had no objection to adjudication by the proper officer if undertaken with independent application of mind and the Standing Counsel accepted that the exercise should not be mechanical - The findings of the FAA in favour of the Petitioner are not interfered with, the order of the FAA is modified so that the proper officer decides the issue strictly in accordance with law by a reasoned and speaking order after hearing the parties - The writ petition is disposed of
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