Merger-Related ITC Dispute Requires Division Bench Hearing: GSTAT Chennai

Assistant Commissioner of GST & Central Excise Vs Rockman Industries Limited (GSTAT Chennai)

Summary: The Goods and Services Tax Appellate Tribunal, Chennai Bench, held that the Department’s appeal concerning disputed Input Tax Credit of Rs.30,23,370/- involves a “Question of Law” within the meaning of Section 109(8) of the CGST Act, 2017 and therefore has to be heard together by one Judicial Member and one Technical Member (Division Bench). The appeal had been placed before the Division Bench under Office Order no. 3/GSTAT//PB 2026 dated 14-05-2026 for determining whether a question of law was involved so as to decide whether it should be heard by a Single Member or a Division Bench. The Department submitted that no question of law arose and that the dispute was confined to the factual question whether the ITC had been validly availed.

The Respondent contended that although the amount in dispute was below fifty lakh rupees, the appeal raised questions concerning the interpretation of statutory provisions and consequently did not satisfy both conditions prescribed for hearing by a Single Member under Section 109(8). It relied upon M/s. Atria Convergence Technologies Ltd. v. Deputy Commissioner of Commercial Tax, where, drawing upon Salmond’s Jurisprudence, the Karnataka High Court explained that a question ordinarily is one of law where its answer is to be found by reference to the statute and that this extends to interpretation of statutory provisions bearing upon the outcome of proceedings. The Respondent framed issues including whether substantive ITC could be denied for a procedural lapse, whether ITC could be denied solely for non-reflection in GSTR-2A for a period prior to introduction of Section 16(2)(aa), whether proceedings could directly be initiated against the recipient for reversal of ITC in case of non-reflection of invoices in GSTR-2A, and whether the disputed ITC could validly be availed only through the mechanism under Section 18(3).