Facts of the Case

The petitioner faced a Section 73 order dated 1st December, 2022, arising from an ITC mismatch notice for tax periods April 2021 to September 2021, raising a demand of Rs.21,38,338/-, which was appealed under Section 107 with the entire amount recovered from the petitioner's cash ledger during pendency of the appeal. Separately, a notice under Section 61 was issued for the wider period April 2021 to March 2022 on the same mismatch allegation, culminating in a fresh Section 73 order dated 11th April, 2025 raising a demand of Rs.51,39,498/- — an amount that included the Rs.21,38,338/- already covered and recovered under the earlier order for the overlapping period April-September 2021.

Issues Involved

  1. Whether a subsequent Section 73 order covering a broader tax period can re-include a demand already raised and recovered for an overlapping sub-period under an earlier order.
  2. What directions are appropriate once such double-counting is conceded by the Department.

Petitioner's Arguments

  • The order dated 11th April, 2025 was without jurisdiction because the demand of Rs.51,39,498/- for April 2021 to March 2022 wrongly comprehended the Rs.21,38,338/- already raised and recovered for April-September 2021 under the earlier order dated 1st December, 2022, which itself was under appeal.

Respondent's Arguments

  • On instructions, the Standing Counsel for CT & GST fairly conceded the factual position that the demand for the overlapping period had indeed been included twice.

Court Order / Findings

  • On the conceded position, the Court held that such a recourse would tantamount to double taxation and could not be sustained in law.
  • The order dated 11th April, 2025 was set aside, with the following directions: the Additional State Tax Officer to issue intimation to the petitioner within a week; the petitioner to produce books of account, tax invoices and other supporting documents for the non-overlapping period October 2021 to March 2022; an opportunity of hearing to be granted without unnecessary adjournments; and the entire re-adjudication exercise, from intimation to a fresh Section 73 order, to be concluded within six weeks.

Important Clarification

  • A proper officer cannot re-agitate and re-demand tax for a sub-period already the subject of a separate, appealed Section 73 order where the demand for that sub-period has been recovered — doing so amounts to impermissible double taxation and renders the later order unsustainable to that extent.
  • Where overlapping periods are involved across successive proceedings, the correct course is to confine the fresh adjudication strictly to the un-adjudicated residual period.

Sections Involved

  • Section 61, GST Act, 2017 — scrutiny of returns.
  • Section 73, GST Act, 2017 — determination of tax not paid/short paid, including on account of ITC mismatch.
  • Section 107, GST Act, 2017 — appeal against the earlier order, under which the overlapping demand had already been recovered.

Decision – In Favour of

The order is in favour of the Assessee. The impugned Section 73 order was set aside for improperly re-including an already-recovered demand, with a time-bound remand confined to the residual period.

Case Details

Court: High Court of Orissa at Cuttack
Case No.: W.P.(C) No. 19501 of 2025
Coram: Hon'ble the Chief Justice Harish Tandon and Hon'ble Mr. Justice Murahari Sri Raman
Date of Order: 11th August, 2025

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