ITC Reversal Order Set Aside: Duplicate Proceedings for Same Period

ITC Reversal Order Set Aside: Duplicate Proceedings for Same Period

Summary in Key Points:

• Issue: Were the subsequent assessment proceedings and the resulting order valid, given that they covered the same supplies and period as the earlier proceedings, leading to contradictory decisions regarding ITC reversal?

• Facts: The petitioner-assessee faced assessment proceedings for the period 2019-2020, starting with a DRC-01A notice. A show cause notice (DRC-01) proposed to reverse Input Tax Credit (ITC). However, the final assessment order dated August 21, 2024, dropped the ITC reversal. Despite this, another set of proceedings began for the same period, culminating in an order dated July 18, 2024, confirming ITC reversal. The petitioner challenged the second order, claiming it dealt with the same supplies as the earlier proceedings.

• Decision: The court set aside the impugned order dated July 18, 2024. The respondent (tax authority) was granted liberty to issue a fresh notice to verify if the supplies covered in both orders were identical and proceed accordingly.

Important Note: This decision highlights the issue of duplicate proceedings and conflicting orders. Conducting two sets of assessments for the same period and supplies, leading to contradictory decisions on ITC reversal, is inefficient and creates confusion for taxpayers. The court’s decision to set aside the second order and allow for verification of the supplies ensures that the assessee is not subjected to conflicting assessments and that the correct decision is ultimately reached. This ruling promotes fairness and prevents unnecessary burden on taxpayers due to administrative inconsistencies.