The court also issued notice to the Department of Revenue, Ministry of Finance, the Commissioner of Central Tax and others on a petition by Canon challenging the department’s 2023 tax demand of Rs 2.24 crore for financial year 2017-18. The case will be further heard on September 25.
Senior counsel Tarun Gulati, appearing for Canon, argued that the short payment of excess ITC availed was suo moto paid by the company prior to the issuance of any show cause notice (SCN). However, the demand order had incorrectly confirmed the SCN’s allegations, he added.
The company said there was no fraud, suppression, misstatement with an intent to evade tax on its part and the SCNs invoking Section 74 of the Central Goods and Services Act, 2017 (CGST) were liable to be dropped.
In 2022, an audit observation requisition was issued by the department to the assessee informing it of discrepancies related to excess ITC availed and short payment of goods and services tax. Even after Cannon had given its detailed explanation with supporting documents, the department in 2023 had issued SCNs, alleging suppression on the ground that if the department had not conducted enquiry, facts regarding the alleged discrepancies would not have come to light.
While Cannon had paid back the excess ITC, the Commissioner of Central Tax in 2024 had upheld the demand.
