GST Dept. Can’t Ignore Disclosures GSTR For Mere Filing Delay: Calcutta High Court

The Calcutta High Court has set aside an appellate order confirming a substantial GST compensation cess demand against a motor vehicle dealer, holding that tax department cannot ignore disclosures made in the annual return merely because they were filed later, especially where the dispute is revenue neutral and involves unavailed input tax credit (ITC). The bench of Justice Om Narayan Rai remanded the matter to the appellate authority for fresh consideration in accordance with law The ruling came in a writ petition filed by a motor vehicle dealer challenging an appellate order dated February 6, 2025, passed under Section 107 of the West Bengal GST Act, 2017 and the Central GST Act. The dispute arose from transactions during the financial year 2017–18, where the petitioner had paid GST along with compensation cess on inward supplies of motor vehicles. The cess paid by suppliers was duly reflected in Form GSTR-2A. According to the facts placed before the Court, while the petitioner collected compensation cess on outward supplies, it did not disclose the same in Form GSTR-3B. The petitioner contended that this was due to a bona fide belief that no cess was payable, as sufficient accumulated cess credit was available on inward supplies. The omission was later detected during finalisation of accounts and was corrected by disclosure of the entire cess amount in the annual return filed in Form GSTR-9. Despite this, a show cause notice was issued under Section 74 of the GST Act alleging suppression and proposing recovery of unpaid compensation cess exceeding ₹44 lakh. An adjudication order followed, confirming tax, interest, and penalty aggregating over ₹1.28 crore. On appeal, the appellate authority accepted that there was no fraud, suppression, or wilful misstatement and accordingly converted the proceedings from Section 74 to Section 73. However, while the penalty was substantially reduced, the authority confirmed the tax demand and declined to give credit for the accumulated cess available on inward supplies, also disregarding the disclosures made in Form GSTR-9. Before the High Court, the petitioner argued that once the appellate authority accepted the absence of suppression, it was inconsistent to ignore the annual return and the claim that the entire issue was revenue neutral, since the petitioner had not availed ITC of the cess paid on inward supplies. It was further argued that the annual return was filed prior to the amendment of Section 44(2) of the GST Act by the Finance Act, 2023, and therefore could not be rejected as time-barred. The State, on the other hand, contended that the annual return was filed beyond the prescribed period and could not be relied upon. It was also argued that certain earlier judgments cited by the petitioner were not binding precedents. The High Court noted that Article 265 of the Constitution mandates that no tax can be levied or collected except by authority of law. It observed that if authorities collect compensation cess on outward supplies without giving credit for unavailed ITC on inward supplies, despite the taxpayer’s claim, it may offend the constitutional principle underlying Article 265. The Court found no convincing reason for the tax department to completely ignore the effect of Form GSTR-9. On the issue of limitation under Section 44(2), the Court held that prior to its amendment with effect from October 1, 2023, there was no absolute prohibition on filing annual returns beyond the prescribed date. The earlier provision did not prescribe any fatal consequence for delayed filing, and the existence of late fees under Section 47 indicated that late filing was contemplated by the statute. Since the petitioner had filed Form GSTR-9 on August 28, 2023, before the amended provision came into force, the bar introduced by the Finance Act, 2023 could not be applied retrospectively. While the Court accepted the State’s argument that a Division Bench judgment cited by the petitioner could not be treated as precedent, it clarified that even independent of that decision, the matter deserved reconsideration in light of constitutional principles and the statutory scheme. The High Court set aside the appellate order dated February 6, 2025, and remanded the case back to the appellate authority to re-examine the appeal afresh, taking into account the annual return filed in Form GSTR-9 and the claim of revenue neutrality arising from unavailed ITC on compensation cess. The writ petition was disposed of without any order as to costs Case Details Case Title: Bidyut Autotech Private Limited and another Vs. The Assistant Commissioner of State Tax Case No.: WPA 12637 of 2025 Date: 26.11.2025 Counsel For Appellant: Ankit Kanodia Counsel For Respondent: Swapan Kumar Dutta Click Here To Read Order Read More: CENVAT Credit Can’t Be Denied on Retention of Detention Amounts: CESTAT

GST Dept. Can’t Ignore Disclosures GSTR For Mere Filing Delay: Calcutta High Court

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