Case Reference
M/s Ahluwalia Contractors India v. Union of India & Ors.
Patna High Court
CWJC No. 10139 of 2024
Date of Judgment: 10 April 2025
Sections Involved: Section 74(9) of BGST Act, 2017 read with Section 20 of IGST Act, 2017; Section 70 CGST Act, 2017
Category: Input Tax Credit (ITC) – Double Demand / Wrongful Availment
Facts (Paras 2–10)
The petitioner, a construction company executing Bihar Police Bhawan project, procured materials from three suppliers against valid tax invoices and payments through banking channels. These supplies were reflected in its GSTR-2A and ITC was availed. Later, during a DGGI (Gurugram) inquiry under Section 70 CGST, it was found that the suppliers were non-existent. To avoid litigation, the petitioner reversed ITC and deposited ₹15,36,770 (tax, interest, penalty) through DRC-03 in June 2022. The DGGI subsequently dropped proceedings.
Despite this, the Deputy Commissioner, State Tax, Patna issued a fresh SCN for FY 2017–18 alleging wrongful availment of ₹4,25,358 ITC, and imposed a demand of ₹13,22,863 (tax, interest, penalty) through order dated 20.05.2024. The petitioner argued this amounted to double taxation on the same invoices already settled before DGGI.
Questions Before Court
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Whether the State GST authority could raise a fresh demand on the same invoices already subjected to reversal and penalty before DGGI?
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Whether the impugned order under Section 74(9) was sustainable when the petitioner’s submissions and supporting documents were ignored?
Observations (Paras 11–16)
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Respondent No.5 (DGGI) admitted in its counter that the petitioner had reversed ITC of ₹15,36,770 covering the disputed invoices.
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The State’s counsel did not dispute that the invoices forming the basis of State demand were the very same invoices settled before DGGI.
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The Assessing Officer had not considered the prior payment and closure of proceedings by DGGI while passing the impugned order.
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The Court found that the impugned order (Annexure-P/10) was passed without due appreciation of material evidence and amounted to duplication of demand.
Judgment (Paras 16–18)
The Court set aside the impugned order dated 20.05.2024 and remitted the matter back to the Deputy Commissioner, State Tax, Patna (Respondent No.8). A fresh order must be passed within two months, after granting the petitioner full opportunity of hearing, and considering the materials including ITC reversal already made before DGGI. The writ petition was accordingly disposed of.
Table of Earlier Cases Referred
| Case | Court | Citation/Year | Ratio |
|---|---|---|---|
| None specifically cited in judgment | – | – | – |
(This judgment proceeds entirely on facts and statutory application, without citing precedent.)
Between Fine Lines
For businesses, this ruling is significant: once ITC reversal and penalty are paid in proceedings before one GST authority (DGGI), parallel proceedings by State authorities on the same invoices cannot stand unless new grounds are shown. Companies should preserve evidence of such settlements to defend against duplicate tax demands.
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