Assistant Commissioner (HPU) Vs Kum Internationals (Karnataka High Court)
The case involves writ appeals filed by the Revenue challenging an order of the Single Judge that had set aside a closure order passed under Section 74(6) of the Central Goods and Services Tax Act, 2017 and directed refund of tax, interest, and penalty paid by the assessee. The central issue relates to whether the reversal of Input Tax Credit (ITC) and subsequent payments made during inspection were voluntary, and the legal consequences of setting aside such closure.
An inspection was conducted at the assessee’s premises on 03.06.2024, during which ineligible ITC was noticed. The assessee reversed the ITC on the same day while the inspection was ongoing and in the presence of the authorities. Subsequently, summons were issued on 04.06.2024, and the assessee sought extension of time on 05.06.2024. On 10.06.2024, the assessee paid tax, interest, and penalty and filed a letter under Section 74(5) requesting closure of proceedings. A statement was recorded on 11.06.2024, and the Proper Officer passed a closure order under Section 74(6) on 27.08.2024.
The assessee filed a writ petition contending that the reversal of ITC and payments were not voluntary but made under coercion and pressure during inspection. The Single Judge accepted this contention, held that the payments and declaration were involuntary, set aside the closure order, and directed refund, while keeping open the issue of adjudication on merits.
