The Delhi High Court has recently highlighted a crucial issue of apparent duplication in tax demands under the Goods and Services Tax (GST) regime. In a petition filed by M/s Lala Shivnath Rai Sumerchand Confectioner Private Limited, the Court observed that demands raised for reversal of availed Input Tax Credit (ITC) and utilisation of the same ITC appear to be overlapping, thereby constituting prima facie duplication of tax liability.
The petitioner, which operates a sweetmeat shop and an attached restaurant, was served with a Show Cause Notice (SCN) and a subsequent Order-in-Original dated February 5, 2025, covering alleged GST violations from financial years 2017-18 to 2022-23.
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The tax authorities argued that the restaurant segment, due to its concessional GST rate of 5%, was not entitled to avail ITC. Based on this, the Additional Commissioner, CGST Delhi-West, demanded:
- ₹11.47 crore of ineligible ITC allegedly used to discharge outward tax liabilities.
- ₹14.94 crore of ineligible ITC for FY 2017-18.
- ₹31.47 lakh excess ITC availed in GSTR-3B over GSTR-2A.
- ₹17.13 lakh for short payment of GST.
- Associated interest and penalties, including ₹25,000 each for CGST and SGST under Section 125.
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The petitioner’s counsel, Advocate Gaurav Gupta, argued that this constituted double demand—firstly disallowing the availed ITC, and secondly penalising for its utilisation, which amounts to being taxed twice on the same credit.
“On a prima facie view, it appears that there would be duplication of two demands as demand qua reversal of availed ITC and demand qua utilisation of ITC would be one and the same thing. But both have been separately demanded in the impugned order,”
– Delhi High Court
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The respondent’s counsel, Ms. Monica Benjamin, maintained that the order was appealable under law. The Court, considering the facts and circumstances, directed the petitioner to approach the Appellate Authority. Significantly, the Court allowed the petitioner to do so without making a pre-deposit in respect of the ₹11.47 crore ineligible ITC demand.
“The petitioner is relegated to the Appellate Authority. However, the pre-deposit shall be only in respect of demands under paragraphs (ii), (iii), and (iv) of the operative part of the impugned order,”
– Delhi High Court
The Court further clarified that if the appeal is filed before 15th July 2025, it must be decided on merits and not dismissed on technical grounds such as limitation.
Bench: Justices Prathiba M. Singh and Rajneesh Kumar Gupta
Case title: M/S Lala Shivnath Rai Sumerchand Confectioner Private Limited v. Additional Commissioner, Cgst Delhi-West, New Delhi
Case no.: W.P.(C) 8028/2025
Appearance: Mr. Garuav Gupta, Adv. for Petitioner; Ms. Monica Benjamin, SSC with Ms. Nancy Jain, Adv. for Respondent
