Designated Committee cannot deny CENVAT credit on grounds not raised in the show cause notice.

The petitioner was issued a show-cause notice (SCN) on 18.06.2018 seeking to deny CENVAT credit of Rs. 1,03,71,501/- on the sole ground that it was claimed beyond the prescribed time limit

The petitioner applied for settlement under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS), but the Designated Committee rejected the claim in 2020. This rejection was challenged in a prior writ (W.P. No. 818 of 2021), where the High Court remanded the matter to determine if the credit was "validly availed"

Upon remand, the Committee issued the impugned order dated 02.11.2022. In this order, the Committee admitted that there was no time limit for the relevant periods (2012-2014) but nonetheless denied the credit on a new ground: that the supplies were delivered to premises other than the petitioner’s registered office

1. Whether the Designated Committee can deny CENVAT credit under the SVLDRS on grounds not mentioned in the original show-cause notice

2. Whether the delivery of goods to a client's site rather than the registered premises is a valid legal ground to deny CENVAT credit under Rule 9 of the CENVAT Credit Rules, 2004

Rule 9 of the CENVAT Credit Rules, 2004, which outlines the documentary requirements for availing credit but does not mandate that goods must be received at a registered place of business

The court relied on Commissioner of Central Excise, Nagpur v. Ballarpur Industries Ltd., which establishes that a tax authority cannot travel beyond the scope of a show-cause notice

The court referenced Commissioner of Service Tax-III v. Reed Elsevier Pvt. Ltd. and M/s Cyquator Media Services P. Ltd. v. Union of India to affirm that credit is eligible even if services/goods are delivered at a client’s site

The court interpreted Sections 123 and 127 of the SVLDRS regarding the Committee’s power to estimate tax dues

The Court noted that the Designated Committee explicitly conceded that the original ground for denial—the time limit—was inapplicable for the years 2012-2014

Having resolved that point in favor of the petitioner, the Committee erred by introducing a new justification for denial (delivery to non-registered premises) which was absent from the SCN

The Court observed that Rule 9 of the CENVAT Credit Rules contains no language requiring delivery to registered premises as a prerequisite for credit eligibility

Section 127 of SVLDRS actually mandates a determination process, including a right to be heard if the Committee’s estimate deviates from the declarant’s. By denying credit on a fresh, legally unsupported ground, the Committee acted arbitrarily

The Court directed the Designated Committee to accept the petitioner’s declaration and issue the Discharge Certificate (SVLDRS-4) within two months. The writ petition was disposed of with no order as to costs