Retrospective Cancellation Of Supplier’s Registration Vis-A-Vis Buyer’s ITC Claim: Calcutta High Court Directs Readjudication

Date:

The Calcutta High Court has directed the re-adjudication on the issue of retrospective cancellation of supplier’s registration vis-a-vis buyer’s Input Tax Credit (ITC) claim.

The bench of  Chief Justice T. S. Sivagnanam and Justice Hiranmay Bhattacharyya has observed that it is for the adjudicating authority, namely, the Deputy Commissioner of State Tax, Shibpur Charge to take a fresh decision in the matter after the additional reply is filed by the appellants/assessee to the show cause notice.

The appellants/assessee were issued a pre-show cause notice under Section 73 (5) of the GST Act dated 16th August, 2023 on the allegation that the appellants had claimed input tax credit against supply received form non-existent RTPs whose registration has been cancelled.

The appellants on receipt of the pre-show cause notice submitted their reply dated 6th October, 2023. Among other things they stated that they have effected purchases from three enterprises and all the purchases made were properly accounted by them and claimed ITC as and when shown in GSTR-2A and they have also cleared their account through bank payment and the details thereof were attached to the reply.

The appellants stated that they are enclosing the copy of all tax invoices, copy of all e-way bills along with copy of kata slip, bank statement and copy of ledger from books.

With regard to the cancellation of the registration of the suppliers the appellants contended that they have made the purchases from those parties at the time when their registrations were active/valid.

The appellants referred to Section 16(2) of the GST Act which stipulates the conditions for availment of input tax credit and they submitted that they have complied with the requirements by producing the tax invoice/debit note or other taxpaying documents and they have received the goods and the tax charged in respect of such supply has been actually paid to the government.

The details were furnished in the periodical returns as could be seen in the GST Portal. With these submissions they requested that the further proceedings in the pre-show cause notice be dropped.

The authority appears to have not been satisfied with the submissions made or with the documents which were enclosed along with reply to the pre-show cause notice and proceeded to issue show cause notice reiterated the same allegations as contained in the pre-show cause notice.

The authority appears to have not been satisfied with the submissions made or with the documents which were enclosed along with reply to the pre-show cause notice and proceeded to issue show cause notice reiterating the same allegations as contained in the pre-show cause notice.

The court noted that two major issues had to be considered by the adjudicating authority, namely, the effect of retrospective cancellation of the registration of the suppliers and the aspect as to whether the purchaser/appellants have proved movement of goods.

The court held that the appellants should submit a fresh reply dealing with all issues with liberty to place the decisions of the various courts on which they seek to place reliance.

The court while allowing the appeal held that it is for the adjudicating authority, namely, the Deputy Commissioner of State Tax, Shibpur Charge to take a fresh decision in the matter after the additional reply is filed by the appellants/assessee to the show cause notice.

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Case Details

Case Title: M/S Jyoti Tar Products Private Limited And Anr. Vs The Deputy Commissioner, State Tax Shibpur Charge Wbgst And Ors.

Case No.: MAT/2100/2024

Date: 14.01.2025

Counsel For Petitioner: Ankit Kanodia, Megha Agarwal, Piyush Khaitan

Counsel For Respondent: T.M. Siddique

Mariya Paliwala
Mariya Paliwalahttps://jurishour.in/
Mariya is the Senior Editor at JurisHour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.

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