Lala Shivnath Rai Sumerchand Confectioner Private Limited Vs Additional Commissioner (Delhi High Court)
In a significant development for a confectioner operating both a sweetmeat shop and an adjoining restaurant, the Delhi High Court has directed M/s Lala Shivnath Rai Sumerchand Confectioner Private Limited to file an appeal before the appropriate Appellate Authority against a substantial demand related to Input Tax Credit (ITC). The court’s directive, issued on June 5, 2025, came after the petitioner challenged a show cause notice and an Order-in-Original that raised demands totaling over Rs. 26 crore for alleged ineligible ITC, short payments, and associated interest and penalties.
The core of the dispute revolves around the eligibility of ITC for businesses that have mixed operations attracting different Goods and Services Tax (GST) rates, specifically a sweetmeat shop and a restaurant. While sweetmeat shops typically attract a higher GST rate and are generally permitted to avail ITC, restaurants usually face a lower GST rate (5%) but are restricted from claiming ITC on their inputs.
Background to the Dispute
M/s Lala Shivnath Rai Sumerchand Confectioner Private Limited operates a business comprising a sweetmeat shop and a restaurant with approximately 30 seating capacity. The dispute originated from a Show Cause Notice (SCN) dated August 5, 2025, followed by an Order-in-Original (No. 314/CGST WEST/GST/SKG/ADC/2024-25) dated February 5, 2025, covering the Financial Year 2017-18.
