ITC cannot be denied without examining documents submitted by Taxpayer

A. B Traders Vs Commissioner of Delhi Goods And Service Tax & Anr (Delhi High Court)

The recent judgment by the Delhi High Court in the case of A. B Traders vs Commissioner of Delhi Goods and Service Tax & Anr sheds light on the complexities surrounding Input Tax Credit (ITC) claims under the Central Goods and Services Tax Act, 2017. The court’s decision to direct re-adjudication following a flawed order signifies the significance of fair and thorough assessment in tax matters.

The petitioner, A. B Traders, contested the order dated 25.12.2023, which disposed of a Show Cause Notice (SCN) issued on 26.09.2023, demanding Rs. 44,48,488.00. The petitioner argued that their detailed reply dated 23.10.2023 was not adequately considered in the impugned order, which was passed under Section 73 of the CGST Act.

The court observed discrepancies in the handling of the petitioner’s response by the tax authorities. While the petitioner provided comprehensive disclosures under each allegation in the SCN, the impugned order merely brushed over the contentions without a thorough examination. Particularly, the court noted that the Proper Officer deemed the petitioner’s reply insufficient and unsatisfactory without substantial justification.

Furthermore, the court highlighted the failure of the Proper Officer to consider the documents submitted by the petitioner, which are crucial for assessing the admissibility of input tax credit. The absence of proper scrutiny and justification for rejecting the petitioner’s claims warranted the court to set aside the impugned order and remit the matter for re-adjudication.

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