Calcutta High Court Set Aside Order Passed By Tax Authorities Declining Input Tax Credit

Recently, Hon’ble Calcutta High Court at Jalpaiguri set aside the order passed by the tax authorities and allowed the writ petition holding therein that the impugned order by which the petitioner has been denied with the Input Tax Credit benefit needs reconsideration and liable to be decided afresh. Hon’ble court further held that cancellation of registration of the supplier with retrospective effect has no such effect on the petitioner because there is no fault on the part of the petitioner. All the documents which he has showed in support of his contention seems to be genuine.

BRIEF FACTS OF THE CASE

The petitioner has filed the writ application challenging the order passed by Joint Commissioner, State Tax, West Bengal, Siliguri Circle dated 13th April, 2022 wherein the appeal preferred by the petitioner is rejected and the order passed by the Adjudicating Authority is withheld The petitioner is aggrieved by the impugned order issued by the respondent authorities for not allowing the petitioner, who is the purchaser of goods in question and refusing to grant the benefit of Input Tax Credit (ITC) on purchase from supplier and also asking the petitioner to pay penalty and interest under the relevant provisions of GST Act. The respondent on the other hand claimed that the supplier is fake and hence his registration is cancelled retrospectively. The petitioner has filed tax invoice, e-way bill, transportation bill and statement of Bank account.

CONTENTION OF PETITIONER

Learned Counsel for the petitioner relying upon the said documents and submits that the authorities have not considered the said documents and from the said documents, it is crystal clear that the petitioner has purchased the goods from the supplier and had transported the said goods and also transferred the amount through bank in the account of the supplier. Learned Counsel for the petitioner relied upon unreported judgment passed by the Principal Bench of the Court in WPA 23512 of 2019 (M/s. LGW Industries Limited & Ors. –vs- Union of India & Ors.) dated 13th December, 2021 and the Judgment reported in 2023 SCC OnLine Del 1412 (Balaji Exim –vs- Commissioner, CGST & Ors.) and submitted that the allegation of fake credit availed by Global Bitumen cannot be a ground for rejecting the petitioner’s refund application unless it is established that the petitioner has not received the goods or paid for them.

CONTENTION OF RESPONDENT

Per contra, Learned Counsel for the respondents submits that the transaction relied by the petitioner with Global Bitumen is of November, 2018 but the authorities have cancelled the registration of the supplier of the petitioner with effect from 13.10.2018 and the said cancellation has been accepted by the supplier.

HON’BLE COURT’S OBSERVATIONS

Hon’ble Mr. Justice Krishna Rao observed that :-

“The main contention of the petitioner that the transactions in question are genuine and valid and relying upon all the supporting relevant documents required under law, the petitioner with due diligence verified the genuineness and identity of the supplier and name of the supplier as registered taxable person was available at the Government Portal showing its registration as valid and existing at the time of transaction.

Admittedly at the time of transaction, the name of the supplier as registered taxable person was already available with the Government record and the petitioner has paid the amount of purchased articles as well as tax on the same through bank and not in cash.

This Court finds that without proper verification, it cannot be said that there was any failure on the part of the petitioner in compliance of any obligation required under the statute before entering into the transactions in question.

In view of the above, Hon’ble court set aside the order passed by the respondent authorities.

Case title :- M/s. Gargo Traders Vs. The Joint Commissioner, Commercial Taxes (State Tax) & Ors.

Case no. :- WPA 1009 of 2022

Order date :- 12.06.2023