Orissa HC Stays SCN-Based Order Alleging Wrongful ITC Availment

By CA Sandeep Kanoi Goods and Services Tax Judiciary February 8, 2025

TaxGuru Citation: 2025 taxguru.in 943
Case Name: Coastal Construction Vs Chief Commissioner of CT and GST (Orissa High Court)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: All High Courts, Orissa High Court

Upgrade to Basic or Premium to download.

Already Upgraded? Log in.

Coastal Construction Vs Chief Commissioner of CT and GST (Orissa High Court)

Orissa High Court heard a petition by Coastal Construction challenging a show cause notice (SCN) issued under Section 73 of the Odisha Goods and Services Tax (GST) Act, 2017. The SCN, dated August 8, 2023, alleged that the petitioner wrongfully availed Input Tax Credit (ITC) of ₹37,02,723 and required its reversal with interest. The petitioner’s counsel argued that the SCN contained an error by adding clause (e) to Section 16(2), which does not exist in the provision. Additionally, the disputed ITC was derived from the company’s balance sheet, and the petitioner explained that a portion of the amount pertained to exempted supplies (diesel and unregistered suppliers), while ₹30,38,928 was related to taxable supplies. The adjudication process led to an impugned order dated December 12, 2023, which the petitioner sought to quash for an opportunity of re-evaluation.

The revenue department, represented by its counsel, maintained that the petitioner had not reversed the sundry creditors’ amount of ₹2,05,70,686 within 180 days, justifying the ITC demand along with interest. The department also contended that the petitioner had lost its right to appeal, making the current petition unsustainable. However, the High Court noted that the inclusion of clause (e) in the SCN and order was a typographical error. While the court did not immediately rule on the validity of the tax demand, it emphasized the need for a clear finding on whether the petitioner had actually availed the disputed ITC. Consequently, the court stayed the impugned order and scheduled the next hearing for January 21, 2025.