Facts of the Case

The Petitioner, Sri Ganpati Exports Pvt. Ltd., filed a writ petition under Article 226 of the Constitution challenging two Orders-in-Original dated 01.02.2025 and 04.02.2025 issued by the GST authorities.

  • A Show Cause Notice (SCN) dated 31.07.2024 was issued by DGGI proposing recovery of Input Tax Credit (ITC) amounting to ₹67,71,420.
  • A second undated SCN raised an additional demand of ₹20,20,414.
  • The Petitioner responded to both SCNs, leading to the impugned Orders-in-Original.

The dispute primarily revolved around errors and duplication in tax demand calculations, including discrepancies in ITC amounts and overlapping claims.

Issues Involved

  1. Whether duplication of demand in two separate Show Cause Notices is legally sustainable.
  2. Whether clerical or computational errors in tax demand amounts can invalidate or require reconsideration of adjudication orders.
  3. Whether the adjudicating authority is obligated to rectify apparent errors and grant a fresh hearing. 

Petitioner’s Arguments

The Petitioner raised three primary contentions:

  1. Duplication of Demand:
    The amount of ₹20,20,414 was included in both SCNs, leading to double taxation.
  2. Incorrect Quantification:
    The total demand was wrongly mentioned as ₹2,83,56,714 instead of ₹67,71,420.
  3. Clerical Error in Figures:
    A component amount was incorrectly reflected as ₹35,85,710 instead of ₹33,85,710.

It was argued that these errors materially affected the adjudication and required correction. 

Respondent’s Arguments

The Respondent (CGST Department):

  • Did not dispute the existence of:
    • Duplication of demand
    • Errors in calculation and figures
  • Accepted that correction of errors was necessary.

Court’s Findings / Order

The Delhi High Court observed:

  • There was a clear duplication of demand and apparent errors in computation.
  • Since these errors were undisputed, the matter required reconsideration.

Directions Issued by the Court:

  1. The Orders-in-Original were set aside for reconsideration, limited to the Petitioner.
  2. The Adjudicating Authority was directed to:
    • Provide a personal hearing to the Petitioner
    • Correct the identified errors
  3. A fresh corrected order must be passed within 30 days.
  4. The Petitioner retains the right to avail further legal remedies after the corrected order.

The writ petition was disposed of accordingly.

Important Clarifications

  • The Court did not adjudicate on merits of ITC eligibility, but only on procedural and computational errors.
  • The ruling emphasizes that:
    • Duplication of tax demand is impermissible
    • Clerical or arithmetic errors must be rectified before enforcement
  • Reinforces the principle of natural justice, especially the right to a fair hearing before correction.

Sections / Legal Provisions Involved

  • Article 226 of the Constitution of India – Writ Jurisdiction
  • GST Law (CGST Act, 2017):
    • Provisions relating to Input Tax Credit (ITC)
    • Adjudication & Show Cause Notices
    • Demand and Recovery Proceedings

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/68919052025CW66642025_164108.pdf

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