Cancellation Of Registration Of Supplier With Retrospective Effect Cannot Be Basis For Rejecting Input Tax Credit- Calcutta HC
The Calcutta High Court has held that considering the cancellation of registration of a supplier with retrospective effect cannot be a basis for a rejection of an ITC (Input Tax Credit) by the authority without considering the documents relied by the person i.e., the buyer.
Finding that the genuineness and identity of the supplier and name of the supplier as a registered taxable person was available at the Government Portal showing its registration as valid and existing at the time of the transaction, the High Court directed the Commercial Tax Department to consider the grievance of the Petitioner afresh by taking into consideration of the documents submitted by the Petitioner in support of his claim and dispose of the claim of Petitioner by passing a reasoned and speaking order after giving an opportunity of hearing.
A Single Judge Bench of Justice Krishna Rao observed, “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. ... The respondent authorities only taking into consideration the cancellation of registration of the supplier with retrospective effect have rejected the claim of the petitioner without considering the documents relied upon by the petitioner."
Advocate Jagriti Mishra appeared for the Petitioner, whereas AGP Subir Kumar Saha appeared for the State.
In a nutshell, the Petitioner (assessee) being the registered taxable person (RTP) claimed credit of input tax against supply made from a supplier. The Petitioner had approached the High Court challenging the order issued by the Respondent authorities 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.
On the other hand, the case of the Respondents was that on inquiry, they came to know that the supplier from whom the Petitioner claimed to have purchased the goods in question are all fake and non-existing and the bank accounts opened by the supplier is based on fake document and the claim of the Petitioner of ITC are not supported by any relevant document. It was the further case of the Respondents that the registration of the supplier in question has already been cancelled with a retrospective effect covering the transaction period of the Petitioner.
After considering the submission, the Bench found that at the time of the transaction, the name of the supplier as a registered taxable person was already available with the Government record and the Petitioner has paid the number of purchased articles as well as tax on the same through bank and not in cash.
The Bench also noted, "It is not the case of the respondents that there is a collusion between the petitioner and supplier with regard to the transaction."
The Court concluded that without proper verification, it cannot be said that there was any failure on the part of the Petitioner in compliance with any obligation required under the statute before entering into the transactions in question. Accordingly, the Court disposed of the plea.
Cause Title: M/s. Gargo Traders v. The Joint Commissioner, Commercial Taxes (State Tax) and Ors.
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