Order Date – 19 June 2025

Parties: Shyama Power India Ltd. Vs State of H.P. & Ors.

Facts – 

• The Petitioner, Shyama Power India Ltd., reversed ITC under protest after a GST audit.
• Despite evidence submitted, the department imposed interest and penalty treating the reversal as admitted liability. Appeal filed by the petitioner was blocked due to portal issues, and rectification was denied.

Issue –

• Whether ITC reversed under protest can be treated as admitted liability for the purposes of levying interest and penalty?

Order – 

• The Divisional bench of Hon’ble High Court observed that once the petitioner had deposited the amount ‘under protest’, the same could not have been considered to be an admission of liability because the necessary corollary of deposit under protest is that the amount towards the alleged liability has been deposited without admitting the liability and inherent therein is his right to challenge the order.
• Furthermore, the adjudicating authority completely erred and failed to take note that Input Tax Credit could not have been reversed, merely on the basis of the suspicion without carrying out any independent investigation coupled with other evidence. 
• In view of the aforesaid discussion, the writ petition is allowed.