Typographical Error in GST Return Leads to ₹79 Lakh ITC Demand:
Delhi HC Grants Relief to Ashish Metals – Delhi High Court
Summary of
the Case
In a significant ruling
protecting assessees from the unintended consequences of clerical errors in GST
filings, the Delhi High Court granted relief to M/s Ashish Metals,
a taxpayer who was saddled with a ₹79.76 lakh demand due to an inadvertent
entry of Input Tax Credit (ITC) in its GSTR-3B return for FY 2018–19.
Despite claiming that the
ITC was never actually availed or utilized, the department confirmed the demand
and penalty, rejecting the taxpayer’s explanation. The High Court directed the
taxpayer to follow the procedure outlined in CBIC Circular No. 224/18/2024,
which stays recovery upon payment of 10% of the disputed amount, while
also preserving the right to appeal once the GST Appellate Tribunal is
constituted.
This judgment ensures
interim protection to taxpayers stuck due to technical, procedural, or human
errors, especially in the absence of an operational appellate tribunal.
Case
Details
- Case Title:
M/s Ashish Metals vs. Union of India & Anr.
- Case Number:
W.P.(C) 4266/2025 & CM APPL.19712/2025
- Date of Decision:
03 April 2025
Factual
Background
1. SCN
Issued for Wrongful ITC Availment
o On
22 September 2022, a Show Cause Notice (SCN) was issued to M/s
Ashish Metals alleging wrongful availment of Input Tax Credit (ITC)
worth ₹79,76,771.52.
o The
credit was allegedly claimed in August 2018, but the petitioner
contended this was due to a typographical error made by its Chartered
Accountant.
2. Adjudication
Order
o The
adjudicating authority passed an Order-in-Original dated 01 February 2024,
confirming the entire demand along with interest and a penalty of ₹7,97,677
under Section 122 of CGST Act.
o The
department treated the entry as deliberate and did not accept the explanation
regarding typographical error.
3. Appeal
Dismissed
o The
petitioner’s appeal before the Commissioner (Appeals) was dismissed on 10
December 2024, reinforcing the original demand.
4. Writ
Petition Filed
o With
no operational GST Appellate Tribunal, the petitioner filed a writ
petition under Article 226 before the Delhi High Court seeking interim
protection and a stay on recovery proceedings.
Petitioner’s
Submissions
The counsel for Ashish
Metals made the following key submissions:
- No Actual ITC Availment:
The ITC of ₹79.76 lakh was never availed or utilized, but was
wrongly reflected in the return due to a data entry mistake.
- Error Was Rectifiable:
Circular No. 26/26/2017-GST dated 29 December 2017 allowed
taxpayers to correct clerical errors if no credit was utilized.
- Rectification Not Enabled:
Although the petitioner sought to amend the error in 2020, the portal
facility for editing the August 2018 return was not available,
leading to continuation of the error.
- SCN Adjudicated Ex Parte:
The SCN was allegedly not served properly, and the adjudication
happened without effective participation from the petitioner.
- Interim Relief under Circular No.
224/18/2024: The petitioner relied on the CBIC
Circular dated 11 July 2024, which provides relief by staying
recovery upon 10% deposit, pending appeal before the GST Appellate
Tribunal.
Respondent’s
Submissions
The GST Department made
the following arguments:
- Demand Based on Returns:
The ITC reflected in the GSTR-3B return was treated as conclusive
evidence of availment, especially since no correction was made in
time.
- Departmental Guidelines Issued:
The CBIC Circular No. 224/18/2024 allows the petitioner to deposit 10%
of the confirmed demand to avail a stay of recovery until the Tribunal
is constituted.
- Appealable Order:
The impugned order is appealable under Section 112 of the CGST Act,
and writ jurisdiction should not substitute the regular appellate
mechanism.
Key Legal
Provisions Discussed
|
Section
|
Description
|
|
Section
73
|
Determination
of tax not paid or short paid due to error or omission.
|
|
Section
112(8) & 112(9)
|
Deposit
of 20% (10% at each appellate stage) to stay recovery pending appeal.
|
|
Section
122
|
Penalty
for certain offences like incorrect reporting of ITC.
|
|
Circular
No. 26/26/2017
|
Allows
rectification of errors in GSTR-3B if no credit was utilized.
|
|
Circular
No. 224/18/2024
|
Provides
procedure for stay of recovery pending appellate proceedings.
|
Court’s
Observations and Findings
1. Acknowledgement of
Typographical Error
The Court noted that the petitioner
had claimed the error was inadvertent, and never utilized the ITC in
question.
2. Procedural Opportunity
Already Granted
While the SCN may have
been adjudicated ex parte, the petitioner was given full opportunity during
the appellate stage, and therefore natural justice was not denied.
3. Interim Mechanism
Recognized
The Bench acknowledged
that the GST Appellate Tribunal was not operational, and hence Circular
No. 224/18/2024 must be relied upon to protect taxpayer rights.
4. 10% Pre-Deposit for
Stay
The Court held that if
the petitioner makes 10% deposit of the disputed demand, recovery
proceedings would be automatically stayed, pending Tribunal
constitution.
“The Petitioner is given
time of eight weeks to make the said pre-deposit... Upon deposit, the demand
shall remain stayed.”
Final
Directions of the Court
1. The
petitioner is to make a 10% pre-deposit of the total confirmed demand
within eight weeks.
2. Upon
deposit, recovery of the balance amount shall remain stayed as per CBIC
Circular guidelines.
3. Once
the GST Appellate Tribunal is constituted, the petitioner is entitled
to file a regular appeal.
4. The
writ petition was disposed of with these directions; all pending
applications were also closed.
Conclusion
The judgment in M/s
Ashish Metals vs. UOI is a crucial relief for businesses facing GST
demands arising from genuine filing errors. The Court struck a balance
between upholding procedural fairness and ensuring revenue protection
through the interim deposit mechanism.
By endorsing CBIC’s 2024
Guidelines, the Delhi High Court reinforced that compliance errors
should not lead to unreasonable penalties or financial distress,
especially when appellate forums are yet to be made operational.
Disclaimer: All the Information is based on the notification, circular and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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