Delhi HC Flags Dual ITC Demand on Sweet Shop-Cum-Restaurant; Limits Pre-Deposit for Appeal

The Delhi High Court has flagged the dual Input Tax Credit (ITC) demand on sweet shop-cum-restaurant and has limited the Pre-Deposit for Appeal.

The bench of Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta has observed 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. Accordingly, in the peculiar facts of the case, the Petitioner is relegated to the Appellate Authority. However, the pre-deposit shall be only in respect of demands.

The Petitioner/assessee runs a sweetmeat shop and a restaurant which is accompanying the same with about 30 persons seating. The SCN has been issued on the ground that a restaurant cannot avail of Input Tax Credit (ITC) as the GST charged on restaurants is only 5%. However, in the sweetmeat shop, the GST charges are higher.

The Petitioner contended that the sweetmeat shop is permitted to avail of the ITC and therefore, the SCN is untenable. The Petitioner has pointed to the Court that there is a double demand which has been raised in the matter firstly by utilizing the ITC availed of and secondly, by not allowing the ITC which has been availed of. This, according to the Petitioner, amounts to duplication and calling for payment of the same amount twice over.

The department stated that it is an appealable order.

The court permitted the appeal to be filed by 15th July, 2025 along with the requisite pre-deposit. If any deposits have already been made by the Petitioner, adjustment thereof shall be given qua the pre-deposit.

Case Details

Case Title: M/S Lala Shivnath Rai Sumerchand Confectioner Private Limited Versus Additional Commissioner, Cgst Delhi-West, New Delhi

Case No.: W.P.(C) 8028/2025 & CM APPL. 35217/2025

Date: 30/05/2025

Counsel For Petitioner: Garuav Gupta

Counsel For Respondent: Monica Benjamin