ITC To Purchaser Can’t Be Denied Citing Supplier’s Retrospective GST Registration Cancellation: Calcutta HC

The Calcutta High Court, Circuit Bench at Jalpaiguri, has reiterated that retrospective cancellation of a supplier’s GST registration, by itself, cannot be the sole ground to deny Input Tax Credit (ITC) to a bona fide purchaser. The bench of Justice Hiranmay Bhattacharyya set aside an appellate order passed under the West Bengal Goods and Services Tax Act, 2017, holding that the appellate authority failed to discharge its statutory duty by not passing a reasoned and speaking order. The writ petition was filed by a registered taxpayer challenging the appellate order dated 16 May 2025, by which the Joint Commissioner (Appeals), SGST, Siliguri Circle, had affirmed an adjudication order passed on 29 August 2024 by the Assistant Commissioner, SGST, Siliguri Charge. The dispute arose from a show cause notice issued under Section 73(1) of the WBGST Act for alleged discrepancies in GST returns for the financial year 2019–20. While four discrepancies were initially alleged, the adjudicating authority accepted the taxpayer’s explanation for three of them. The controversy before the High Court was confined only to discrepancy no. 3, which related to the availment of ITC on inward supplies received from a supplier whose GST registration was later cancelled retrospectively. The tax department alleged that ITC was wrongly availed on invoices issued by a supplier whose GST registration had been cancelled retrospectively, rendering the credit inadmissible under Section 16 of the CGST/WBGST Acts. Based on this reasoning, tax, interest, and penalty were confirmed under Section 73(9) of the Act, and the appellate authority subsequently upheld the adjudication order. The petitioner consistently maintained that the transactions were genuine and bona fide. To support this claim, extensive documentary evidence was placed on record, including tax invoices, e-way bills, transport documents, bank statements, and party ledgers. The taxpayer contended that payments were made through proper banking channels, goods had physically moved from the supplier to the purchaser, and the supplier’s GST registration was active at the time when the supplies were made. Notably, even the appellate authority acknowledged in its order that such documents were indeed submitted by the petitioner. After examining the appellate order, Justice Hiranmay Bhattacharyya observed that the appellate authority had mechanically affirmed the adjudication order without independently analysing the documentary evidence produced by the taxpayer. The Court found that no reasons were recorded as to why the invoices, e-way bills, transport documents, and banking records were insufficient to establish the genuineness of the transactions or actual movement of goods. The Court further noted that the only ground relied upon by the appellate authority was that the invoices were issued after the “effective date” of cancellation of the supplier’s registration, even though the cancellation itself was effected later with retrospective effect. Importantly, the revenue did not dispute that on the date of supply, the supplier’s GST registration was valid and active. Reiterating settled legal principles, the High Court held that retrospective cancellation of a supplier’s GST registration cannot, on its own, justify denial of ITC to the purchasing dealer, especially when there is no allegation that the purchaser was complicit in any fraud or that the transactions were fictitious. The Court emphasized that authorities must examine whether statutory conditions for availing ITC were satisfied and whether actual supply of goods had taken place, based on available evidence. While the State argued that the petitioner failed to appear for personal hearings before the appellate authority, the Court held that mere non-appearance cannot absolve the appellate authority of its duty to examine the material already on record. Even in the absence of personal appearance, the authority was required to return findings on the relevance and sufficiency of the documents submitted. Concluding that the appellate order was a non-speaking order, the High Court set it aside insofar as it related to discrepancy no. 3. The appellate authority has been directed to fix a fresh date of hearing, give advance notice to the taxpayer, and thereafter pass a reasoned and speaking order after considering all materials on record. The writ petition was disposed of with these directions. Case Details Case Title: Shyamalmay Paul Versus Assistant Commissioner SGST, Siliguri Charge, Siliguri & Ors. Case No.: WPA 2192 of 2025 Date: 04/11/2025 Counsel For Petitioner: Boudhayan Bhattacharyya Counsel For Respondent: AAG Joyjit Choudhury Click Here To Read Order Read More: How Much Do Content Creators Earn in India Per Month?

ITC To Purchaser Can’t Be Denied Citing Supplier’s Retrospective GST Registration Cancellation: Calcutta HC

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