VTL Global Supply Chain Solutions Pvt. Ltd. v. Assistant Commissioner (ST) & Ors.

Court: High Court of Judicature at Madras
Petition No.: W.P. No. 37263 of 2024 with W.M.P. Nos. 40283, 40285 & 40286 of 2024
Date of Judgment: 06.12.2024
Relevant Sections: Section 73, Rule 108, CGST Act 2017, TNGST Act 2017, CGST Rules 2017, TNGST Rules 2017
Category: Input Tax Credit (ITC) Reversal Dispute

Facts of the Case (Paras 2, 2.1, 3)

• The petitioner, a registered company under GST, was issued ASMT-10 notice dated 04.05.2023 alleging non-reversal of ITC on account of credit notes issued by suppliers reflected in GSTR-2A.

• Petitioner replied in ASMT-11 (03.06.2023) claiming ITC was availed after adjusting credit notes; hence no reversal was required.

• A DRC-01 SCN dated 11.09.2023 proposed a demand of ₹60,97,044/- (CGST ₹30,39,936 + SGST ₹30,39,936 including interest and penalty).

• Only one personal hearing was fixed before the SCN response due date; order in DRC-07 dated 25.10.2023 confirmed demand.

• Petitioner alleged lack of proper service (only uploaded on portal, not physically served). Appeal filed was dismissed for delay in filing.

• Petitioner requested fresh opportunity citing Madras HC ruling in Balakrishnan Balu Cables (10.06.2024), offered to deposit 25% of disputed tax, and sought lifting of bank attachment.

Questions in Consideration (Paras 3, 4, 5)

1. Whether the ITC reversal demand was validly adjudicated when credit notes were already adjusted?

2. Whether principles of natural justice were violated by non-service of SCN and inadequate hearing?

3. Whether bank attachment and recovery can continue when the matter is pending fresh adjudication?

Observations of the Court (Paras 4–6)

• Court noted petitioner’s willingness to deposit 25% of disputed tax and seek one more opportunity.

• Referred to Balakrishnan Balu Cables case, which allowed reconsideration on similar grounds of procedural lapse.

• Respondents had no serious objection to lifting bank attachment if 25% disputed tax was deposited.

• Court directed:

  • If petitioner already paid 10%, it shall be adjusted.

  • Balance to be paid to make up 25% within four weeks.

  • Impugned order to be treated as SCN afresh, and petitioner allowed to file objections with documents within four weeks.

  • Authorities to pass fresh order after reasonable opportunity of hearing.

  • If conditions not complied, earlier assessment order shall stand revived.

Judgment of the Court (Paras 6, 7)

• Impugned orders dated 25.10.2023 were set aside.

• Petitioner directed to deposit 25% of disputed tax (adjusted against prior payments if any).

• On compliance, order to be treated as fresh SCN, with liberty to file objections and be heard.

• Bank attachments to be lifted upon deposit of 25%.

• If not complied, earlier assessment order would revive automatically.

• Writ petition disposed with no order as to costs.

Between Fine Lines (Simple Summary in 5 Points)

• ITC demand of ₹60.97 lakh was raised for FY 2017–18 due to non-reversal against credit notes.

• Petitioner claimed ITC was correctly adjusted and orders were passed without proper hearing.

• Court held principles of natural justice were violated.

• Order was set aside, subject to deposit of 25% disputed tax.

• Fresh adjudication directed, and bank attachment lifted conditionally.

Summary of Referred Cases

Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”