Rivera Enterprises Vs Commercial Tax Officer
Date: October 29, 2025
Subject Matter
Recovery Proceedings for Interest on Belated IGST ITC Quashed Due to Statutory Regularization
Summary
The writ petition has been allowed, and the impugned recovery proceedings in DRC-13 for interest on belatedly availed IGST Input Tax Credit (ITC) are quashed. This decision is based on a prior High Court order that set aside the underlying ITC reversal, citing a statutory intervention with retrospective effect which regularized the belated availing of ITC.
Summary of Facts and Dispute:
- Impugned Action: The petitioner challenged an assessment order dated 08.03.2024 and a consequent garnishee order dated 01.09.2025 in DRC-13, seeking to recover interest on belatedly availed IGST Input Tax Credit of Rs. 6,68,257/- for the tax period 2018-19.
- Petitioner's Argument: The petitioner argued that the belated availing of IGST ITC for Rs. 6,68,257/- had been regularized by a statutory intervention (retrospective insertion of Rule 16(5)) and confirmed by a prior High Court order dated 02.07.2025 in WP.No.16289 of 2025, thereby rendering the current recovery proceedings for interest arbitrary.
- Core Question of Law: Whether recovery proceedings for interest on belatedly availed IGST Input Tax Credit are valid when the underlying belated availing of ITC has been regularized by a retrospective statutory intervention and upheld by a previous High Court order.
Key Legal Issues & Findings:
Impact of Retrospective Statutory Intervention on ITC Regularization and Interest Recovery
The Court relied on its earlier decisions in WP.No.16289 of 2025 and WP.Nos.25081 of 2024 batch to determine the effect of the statutory changes.
- Previous Order and ITC Reversal: An earlier order demanding ITC reversal, issued in response to a DRC-01 notice dated 19.12.2023, was successfully challenged by the petitioner.
- Statutory Intervention: The High Court, via an order dated 02.07.2025, set aside the previous order based on the retrospective insertion of Rule 16(5) to the respective GST Rules through SO 453(E) by Finance (No.2) Act, 2024 (15 of 2024) dated 16.08.2024, effective from 01.07.2017.
- Regularization of Belated ITC: Consequently, the belated availing of IGST ITC, which was the subject matter of the earlier challenge, stands regularized by virtue of this statutory intervention.
- Arbitrary Recovery: As the underlying belated ITC availing has been regularized, the impugned assessment order dated 08.03.2024 and the subsequent recovery proceedings in DRC-13 dated 01.09.2025 for interest on this amount are deemed arbitrary and without legal basis.
Ruling:
- Outcome: The impugned recovery proceedings in DRC-13 dated 01.09.2025, consequential to the assessment order dated 08.03.2024, are quashed.
- Directions: The case is remitted back to the respondents to pass a fresh order taking into consideration the High Court's order dated 02.07.2025 in WP.No.16289 of 2025, as expeditiously as possible.
- Liberty: No specific liberty granted to Revenue for fresh proceedings; the matter is remitted for re-evaluation in light of the High Court's prior observations.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
In this Writ Petition, the petitioner has challenged the impugned assessment order dated 08.03.2024 and the impugned garnishee order dated 01.09.2025 in DRC-13.
2. Earlier the Petitioner was issued with GST ASMT-10 under Rule 99(1) on 19.05.2022. In the aforesaid intimation in GST ASMT-10, the petitioner was called upon to reverse the sum of Rs.6,68,257/- being the input tax credit availed on IGST belatedly beyond the limitation prescribed under Section 16(4) of the respective enactments. As the petitioner failed to reverse the same, earlier an order came to be passed on 29.04.2024 in response to the notice in DRC-01 dated 19.12.2023.
3. The above order was successfully challenged by the petitioner before this Court in WP.No.16289 of 2025 in the light of the statutory intervention with the insertion of Rule 16(5) to the respective GST Rules vide SO 453(E) with retrospective effect from 01.07.2017 inserted by Finance (No.2) Act, 2024 (15 of 2024) dated 16.08.2024.
4. Vide order dated 02.07.2025 in WP.No.16289 of 2025, the impugned order therein was set aside following the views taken by this Court earlier in a batch of Writ Petitions in WP.Nos.25081 of 2024, etc. batch, vide order dated 17.10.2024.
5. As far as the input tax credit of IGST, which was also availed belatedly is concerned, the same stands now regularised by virtue of the order dated 02.07.2025 in WP.No.16289 of 2025. The impugned order dated 08.03.2024 and the consequent impugned recovery notice in DRC-13 dated 01.09.2025 are concerned, prima facie indicates are for recover the interest on account of the belated availing of the input tax credit on the IGST during the tax period 2018-19.
6. The amount of IGST in the mentioned impugned order also matches with the amount mentioned in Form GST ASMT-10 for a sum of Rs.6,68,257/-, which was the subject matter of the challenge before this Court in WP.No.16289 of 2025 in order dated 27.12.2025. Rs.6,88,527/- appears to be a typographical error.
7. Therefore, the impugned order of recovery proceedings in DRC-13 dated 01.09.2025 pursuant to the impugned order dated 08.03.2024 are arbitrary as the belated availing of the input tax credit has been regularised by way of statutory intervention as mentioned above, in view of the order of the Writ Court dated 02.07.2025 in WP.No.16289 of 2025.
8. Considering the over all circumstances of the case, the case is remitted back to the respondents to pass a fresh order taking note of the order of the Writ Court in WP.No.16289 of 2025 as expeditiously as possible. Since the matter is remitted back to the respondents to redo the exercise afresh in the light of the above observations, the recovery proceedings in DRC-13 dated 01.09.2025 stands quashed. Accordingly, this Writ Petition is disposed of. No costs. Consequently, connected miscellaneous petitions are closed.