2026-VIL-325-GSTAT-AGR
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  2. 2026-VIL-325-GSTAT-AGR

SGST Tribunal

GST - Departmental appeal against order of the FAA reducing demand - Scrutiny of returns, Input Tax Credit under Section 17(5), capital goods and cancelled e-way bills - Respondent did not respond to the notice for discrepancies in scrutiny of returns or to the SCN under Section 73, and an ex-parte order imposed tax and penalty. The FAA partially allowed the appeal and substantially reduced the demand - The Appellant-Department contended that the FAA reduced the demand without appreciating the facts, that the discrepancies between returns, the blocked credits, the credit on capital goods and the treatment of expenses were not satisfactorily explained, and that cancelled e-way bills were rightly treated as suppressed supplies - Whether the order of the FAA was passed after due scrutiny of all the relevant facts or suffers from any infirmity of law and facts requiring interference - HELD - The FAA analysed each point raised in the SCN through the books of account and documents and passed a reasoned order. Expenses on job work were verified through tax invoices reflected in the supplier-based return, with credit claimed in the return and not questioned. Repair expenses of machinery were verifiable, and for other repairs no credit was claimed. Insurance of stock is not prohibited by Section 17(5), which bars credit only for general insurance, servicing, repair and maintenance of motor vehicles, vessels or aircraft, and the credit was rightly allowed except for a small expenditure not related to furtherance of business, which was rightly disallowed - On capital goods the FAA examined the matter in detail and disallowed only the credit relating to office chairs, wire and a mobile phone as not related to furtherance of business, while other credit was allowable. The cancelled e-way bills were found to be due to typographical and clerical errors, copies were produced, and new e-way bills were issued against the same invoices immediately or within a short period less than the time required for transportation, so no likelihood of misuse was found. The Department failed to point out any factual or legal infirmity in the order - The order of the FAA is upheld and the departmental appeal is dismissed
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