Finding that the petitioner (Vedanta Ltd.) was subjected to reassessment based on information from DGGI intelligence alleging availment of bogus Input Tax Credit (ITC) from a copper sale & repurchase transaction, but subsequent closure of the main ITC issue by the GST department occurred after the impugned reassessment order, the Delhi High Court quashed the reassessment and remanded the matter for reconsideration in light of GST order.
While clarifying that the closing of proceedings by the GST Department would directly impact the reassessment, the Court refrained from deciding the legality and validity of the reopening notice, as there has to be an independent reasoning by the Income Tax Department.
The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain observed that the present case is governed by the provisions of Section 148A of the Income Tax Act, as amended and brought into effect from September 01, 2024, and notably, the impugned order was passed before the GST order regarding availing of wrong ITC. Thus, obviously, the said order of the GST department could not have been taken into consideration by the AO.
Accordingly, the Bench directed the petitioner to place the GST order before the AO, along with a short note of submissions, and asked for passing of the fresh order under Section 148A(3) within a period of three months.
Briefly, the petitioner entered into a sale transaction of copper concentrate with one ‘X’ when its copper plant was closed down due to environmental concerns. After the repurchase, the copper plant was directed to be restored for operation. In the meantime, the AO received intelligence from the Directorate General of GST Intelligence, in respect of wrongful availment of ITC without actual receipt of goods at the declared place of business of the petitioner. Opining that bogus ITC amounting to more than Rs. 424 crores has been availed of, the AO passed an order under section 148A(3) of the Income Tax Act.
Appearances:
Pragyan Pradip Sharma, along with Advocates Divyanshu Agrawal, Vaibhav Niti, Hardik Jain, and Rachit Sharma, for the Petitioner/ Taxpayer
Advocates Ruchir Bhatia, Anant Mann and Abhishek Anand, for the Respondent/ Revenue
