Justice M.S. Ramesh set aside the impugned order and the issue with regard to restriction of the amount of Input Tax Credit for prior sufferance of taxes is remanded back to the Assessing Officer for fresh consideration.

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AO may call for objection in respect of ‘Input Tax Credit on reversal on Wastage’ and ‘Ineligible claim of ITC on Goods’: Madras HC [Read Order]

September 14, 2020 2:11 pm| By : Mariya Paliwala
AO – Madras High Court – Taxscan
The Madras High Court allowed the Assessing Officer (AO) to issue a show-cause notice to the petitioner calling for his objections with regard to “Input Tax Credit on reversal on wastage” and “Ineligible claim of ITC on goods” are concerned.

The petitioner, M/s.Sri Ranganathar Valves Private Limited raised issues related to the restriction of the amount of Input Tax Credit (ITC) claimed in Form W for the months of December 2013 to May 2014 for separate orders for every month.

The restriction of the amount of Input Tax Credit has been done predominantly on the head of Prior sufferance of Taxes; ITC on reversal on wastage; and Ineligible claim of ITC on goods.

The Assessing Officer was of the view that some of the sellers from whom the petitioner had purchased the goods had not paid tax to the Government, as far as the restriction of the amount for prior sufferance of taxes are concerned.

The single-judge bench of Justice M.S. Ramesh set aside the impugned order and the issue with regard to restriction of the amount of Input Tax Credit for prior sufferance of taxes is remanded back to the Assessing Officer for fresh consideration.

“The Assessing Officer shall, before taking a final decision, extend due opportunity of personal hearing to the petitioner and endeavor to complete the proceedings, at least within a period of twelve weeks from the date of receipt of a copy of this order,” the court said.

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