Validity of Fresh ITC Reversal Beyond Prescribed Time: Gujarat HC Ruling

Ajay Industries & Anr. Vs Union of India & Ors. (Gujarat High Court) The Hon’ble Gujarat High Court in Ajay Industries & Anr. v. Union of India & Ors. [SCA No. 2951 of 2025 dated April 16, 2025] held that once Input Tax Credit (“ITC”) is reversed prior to issuance of a Show Cause Notice (“SCN”), the authorities cannot raise a fresh demand on the same amount without verifying Goods and Services Tax Network (“GSTN”) data. The Court further emphasized that the proper course was to either recredit the ITC already reversed with retrospective effect or to charge only in...