Whether the assessment order is liable to be set aside when reply furnished by the taxpayer is not taken into consideration

Yes, the Honorable High Court of Madras in the case of Monika Alloys India Private Limited vs State Tax Officer (W.P. No.16563, 18170 & 18171 of 2024) set aside the impugned order and remanded back the matter for reconsideration. The Honorable Court noted that the petitioner was served a show cause notice dated 19.09.2023, alleging wrongful availment of Input Tax Credit. The petitioner replied to this notice on 10.10.2023 by uploading it on the portal along with an attachment explaining that the transitional VAT credit was claimed by filing Form TRAN-1. However, the impugned order recorded that the petitioner did not file any objections to the DRC-01 notice or provide any documentary evidence, which contradicted the documents on record. Therefore, the Honorable Court set aside the impugned order and remanded the matter for reconsideration. The respondent was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue and fresh order within three months from the date of receipt of a copy of this order.

Author’s Comments

Important to mention here that the Trans credit is neither the input tax as per Section 2(62) of the CGST Act, 2017 nor the output tax as per Section 2(82) of the CGST Act, 2017. Therefore, the transition credit claimed and utilized, even if found to be ineligible cannot be demanded under section 73 or 74 of the CGST Act as there is no jurisdiction with the proper officer under these provisions of the law. There transaction credit once claimed cannot be distributed in the law.