GST Liability raised w.r.t. ITC Reversal on Credit Notes: Madras HC remands for Reconsideration on 12.5% Pre-deposit

The Madras High Court recently overturned a GST demand order concerning Input Tax Credit (ITC) reversal on credit notes reflected in GSTR-2A. The court remanded the case with a 12.5% pre-deposit, challenging the original order's validity due to the petitioner's lack of opportunity to contest the tax demand initially. The dispute arose from a show cause notice issued to M/s. Orient Electricals and Engineers India P. Ltd, notifying them about potential ITC reversal due to supplier credit notes. The petitioner's unawareness of this notice led to delayed action, resulting in a subsequent appeal and now a writ petition. The court emphasized fair procedure and directed a fresh review, allowing the petitioner to respond to the notice and ensuring a personal hearing. This decision followed the petitioner's deposit of 12.5% of the disputed tax amount. The ruling also lifted bank attachments related to the case.