2026-VIL-239-GSTAT-THN
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  2. 2026-VIL-239-GSTAT-THN

SGST Tribunal

GST - Denial of input tax credit on supplies from suppliers whose registrations were cancelled retrospectively – Validity of SCN and Order-in-Original that are cryptic and non-speaking - Violation of principles of natural justice – Appellant availed input tax credit on inward supplies from registered suppliers later categorised as non-genuine taxpayers whose registrations were cancelled ab initio - SCNs under Section 73 issued solely on supplier-side cancellations stated only ‘As per attachment under the brief facts and grounds’ - The Appellant did not reply and ex-parte orders confirming tax, interest and penalty were passed describing the issue in a single line - Whether denial of input tax credit under Section 16 through SCNs and orders that are cryptic, non-speaking and devoid of independent reasoning violates the principles of natural justice - HELD – Though the burden of proving eligibility to input tax credit lies on the claimant under Section 155, the revenue authorities are equally bound to afford a fair opportunity to discharge it, which begins with a valid, detailed and speaking SCN - The SCNs showed a glaring lack of substantive reasoning and did not elaborate any specific finding or the nature of the alleged contravention. The Adjudicating Authority confirmed substantial demands without recording any independent analysis or factual findings. Every quasi-judicial authority must pass a speaking order and recording of reasons is an essential facet of natural justice. The Department cannot rely solely on retrospective cancellation of the suppliers' registrations to confirm a demand without independently verifying the facts and giving the Appellant a fair and transparent opportunity of being heard - The orders of the adjudicating authority are vitiated for violation of natural justice and are set aside - The matter remanded for fresh adjudication without expressing any opinion on the merits of admissibility of credit - The appeals are allowed by way of remand to the adjudicating authority - Dismissal of appeal by First Appellate Authority on the ground of non-prosecution without deciding the merits - Section 107(11) and 107(12) of the CGST Act, 2017 - The FAA rejected the appeals on merits for want of transport documents such as lorry receipts and toll receipts and also on the ground of non-prosecution for non-attendance at the scheduled hearings - Whether the FAA can dismiss a statutory appeal for non-prosecution or default in appearance without independently adjudicating the documentary evidence on record - HELD - Section 107(11) requires the Appellate Authority, after making such further inquiry as may be necessary, to pass such order as it thinks just and proper confirming, modifying or annulling the order appealed against. Section 107(12) requires the order to be in writing stating the points for determination, the decision thereon and the reasons for such decision - The Appellate Authority has a statutory duty to examine the merits and the grounds raised even if the appellant is not present. Dismissal of an appeal for non-prosecution amounts to abdication of statutory powers and is legally unsustainable. As the adjudication orders had no legal or factual reasoning and the appellate orders failed to cure the defect, there was gross violation of the principles of natural justice - The orders of the FAA are set aside and the appeals are allowed by way of open remand to the adjudicating authority for fresh adjudication.
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