Double Demand on ITC Mismatch Unsustainable: Orissa High Court

Sai Sitaram Construction Vs Joint Commissioner of CT & GST (Orissa High Court)

The Orissa High Court, in the case of Sai Sitaram Construction vs. Joint Commissioner of CT & GST, addressed the issue of a tax demand order that allegedly included an amount previously levied for the same tax period. The petitioner, Sai Sitaram Construction, challenged an order dated April 11, 2025, from the Additional State Tax Officer, which raised a demand of ₹51,39,498 under Section 73 of the Central Goods and Services Tax (GST) Act for the financial year 2021-22.

The petitioner’s counsel, Ms. Kajal Sahoo, argued that this new demand was without jurisdiction because it included a previous demand of ₹21,38,338 that had already been raised and recovered for the tax periods of April 2021 to September 2021. This prior demand was the result of an earlier order dated December 1, 2022, and the amount had been deducted from the petitioner’s cash ledger while an appeal was pending. The new order, covering the period from April 2021 to March 2022, effectively re-levied the earlier disputed amount, which the petitioner contended constituted double taxation.

During the court proceedings, the learned Standing Counsel for the CT & GST department, Mr. Sunil Mishra, conceded to the petitioner’s claim. He confirmed that the demand for the April to September 2021 tax periods, which had been the subject of the December 2022 order, was indeed included in the new April 2025 order.

Based on this concession, the Orissa High Court found the order of April 11, 2025, to be legally unsustainable. The court reasoned that such a practice amounted to double taxation, which is not permissible under the law. As a result, the court set aside the challenged order.

The court’s decision was based on the principle that the same tax liability cannot be imposed twice on a taxpayer for the same period. This aligns with the fundamental legal principle against double jeopardy in fiscal matters. While the court did not cite specific judicial precedents, its ruling is consistent with the general principle that taxing authorities cannot levy the same tax demand multiple times.

To resolve the matter, the High Court issued specific directions to the tax authorities. The Additional State Tax Officer was instructed to issue an intimation to the petitioner within one week of receiving the court’s order. The petitioner was then required to produce all relevant books of account, tax invoices, and other documents to support their claims for the tax periods from October 2021 to March 2022, which were the only periods legitimately in dispute in the new order. The authority was directed to provide the petitioner with an opportunity for a hearing and to pass a new, appropriate order under Section 73 of the GST Act. The court mandated that this entire process be completed within six weeks from the date of the intimation.

This ruling effectively nullified the flawed tax demand and ensured that the tax authority would re-evaluate the petitioner’s liability for the remaining, un-disputed tax periods without the previously levied amount. The court’s intervention prevented a potential miscarriage of justice and reinforced the need for tax authorities to be meticulous in their calculations and to avoid imposing duplicate demands on taxpayers. The final decision addressed the immediate grievance of the petitioner while providing a clear path for the proper assessment of their tax liabilities, thereby disposing of the writ petition.

FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT

This matter is taken up through hybrid mode.

2. Challenge is laid to an order dated 11^th April, 2025 passed by the Additional State Tax Officer, CT & GST Ganjam-I Circle, Berhampur under Section 73 of the Central Goods and Services Tax Act, 2017/Odisha Goods and Service Tax Act, 2017 (collectively, “GST Act”) with respect to the tax periods covered under the financial year 2021-22 by way of filing this writ petition invoking provisions of Articles 226 and 227 of the Constitution of India.

3. On scrutiny of returns filed in GSTR-3B, a notice for adjudication under Section 73 of the GST Act alleging mismatch in the claim of the input tax credit (ITC) vis-à-vis the statement of inward supply in GSTR-2B was initiated which culminated in raising of demand of Rs.21,38,338/- by the Joint Commissioner of State Tax, CT & GST, Ganjam-I Circle pertaining to tax periods from April, 2021 to September, 2021 vide order dated 1st December, 2022 (Annexure-3). Challenging the said order dated 1st December, 2022, an appeal under Section 107 of the GST Act was preferred and the entire demanded amount is said to have been deducted from the cash ledger of the petitioner.

4. While the matter stood thus, notice under Section 61 of the GST Act was issued with the self-same allegation of mis­match with regard to claim of input tax credit for the tax periods from April, 2021 to March, 2022 by the Additional CT and GST Officer, Ganjam-I Circle, Ganjam. Exercising powers to adjudicate under Section 73 of the GST Act, an order dated 11^th April, 2025 was framed by raising a demand of Rs.51,39,498/-.

5. Ms. Kajal Sahoo, learned Advocate appearing for the petitioner contended that the order dated 11^th April, 2025 invoking the provisions of Section 73 of the GST Act is without jurisdiction inasmuch as the demand of Rs.51,39,498/- has been raised for the tax periods from April, 2021 to March, 2022 comprehends demand of Rs.21,38,338/- as had already been raised in the order dated 1^st December, 2022 pertaining to tax periods April, 2021 to September, 2021. Therefore, she essentially argued before this Court that the authority concerned could not have included the demand for the tax periods from April, 2021 to September, 2021 vide order dated 1^st December, 2022, which stood recovered during the pendency of appeal while passing an order dated 11^th April, 2025 for the tax periods from April, 2021 to March, 2022.

6. When the matter was taken up on 18^th July, 2025, taking note of such submissions, this Court adjourned the matter on the request of the learned Additional Standing Counsel for CT and GST Organization for seeking instructions in this regard.

6.1.When the matter is taken up today, Mr. Sunil Mishra, learned Standing Counsel for CT and GST, on instructions, fairly conceded that the fact as demonstrated by the learned counsel for the petitioner that the demand raised in respect of the tax periods from April, 2021 to September, 2021 vide order dated 1st December, 2022 has again been included in the demand raised for the tax periods from April, 2021 to March, 2022 by virtue of order dated 11^th April, 2025 (Annexure-8).

7. Considered the submissions of learned counsel for respective parties and perused the record.

8. On the conceded position as aforesaid, this Court cannot, therefore, sustain the order dated 11^th April, 2025 as tenable in the eye of law as such a recourse would tantamount to double taxation. Hence, said order is, hereby, set aside. However, this Court feels it expedient to direct as follows:-

(i) The Additional State Tax Officer, Ganjam-I Circle, Ganjam shall, on receipt of copy of this order, issue intimation to the petitioner within a week therefrom.

(ii) The petitioner shall produce books of account, tax invoice(s) with reference to claims made in its return(s) and any other document(s) in support of its claim for the tax periods from October, 2021 to March, 2022 before the said authority.

(iii) The authority concerned shall afford opportunity of hearing to the petitioner; and the petitioner shall cooperate with the authority and it shall not be granted any unnecessary adjournments;

(iv) The said authority shall pass appropriate order taking into consideration the evidence produced and submissions made before him by the petitioner;

(v) The entire exercise from the date of issue of intimation till passing of order under Section 73 of the GST Act shall be concluded within a period of six weeks.

9. With the aforesaid observations and direction, the writ petition stands disposed of. All pending Interlocutory Application (s), if any, shall stand disposed of.