Calcutta High Court Quashes GST Order
M/s Jyoti Tar Products Private Limited vs. Revenue [ MAT / 2100 / 2024 ]
Background of the Case
The appellant, M/S Jyoti Tar Products Private Limited received an adjudication order dated 10th July, 2024, passed under Section 74(9) of the WBGST/CGST Act. The core issue stemmed from a pre-show cause notice issued on 16th August, 2023, under Section 73(5) of the Act. The notice alleged that the appellant had wrongly claimed ITC against supplies received from certain non-existent suppliers whose GST registrations had been cancelled. This order was subsequently challenged by the appellant in a writ petition, which was dismissed by an order dated 11th November, 2024, leading to the current intra-court appeal.
Arguments by the Appellant
The appellant explained that all purchases were legitimately accounted for in their books. They asserted that ITC was claimed correctly as reflected in their GSTR-2A, and all payments for these purchases were duly made through banking channels, with supporting bank statements and ledger copies provided. Furthermore, the appellant furnished copies of all relevant tax invoices, e-way bills, and kata slips to establish the genuineness of the transactions and movement of goods. Crucially, they contended that these purchases were made at a time when the suppliers’ GST registrations were active and valid.
The appellant strongly relied on the conditions stipulated under Section 16(2) of the Act for ITC availment. They also emphasized that all necessary details were furnished in their periodical returns on the GST Portal. They vigorously argued that the retrospective cancellation of a supplier’s registration should not adversely impact a purchaser’s right to claim ITC, provided the purchaser can prove compliance with Section 16(2).
Respondent’s Response
The respondent, the Revenue, did not find the submissions satisfactory. Consequently, they proceeded with the issuance of a formal show cause notice and subsequently passed their adjudication order. In this order, a new finding was introduced, expressing doubt about the nature of business carried on by the suppliers, stating that their registration details did not align with the goods purportedly purchased by the appellant. The Respondent stated that retrospective cancellation of a supplier’s registration impacts the ITC claim by purchasing dealer’s.
Court Findings and Decision
The Calcutta High Court, in its findings, emphatically stated that the respondent had failed to address two fundamental issues that were central to the case. Firstly, the authority did not examine the legal implications of a retrospective cancellation of a supplier’s registration on the purchasing dealer’s ITC claim. Secondly, it did not properly evaluate whether the appellants had successfully proven the actual movement and receipt of goods through the substantial documentary evidence provided. Given these significant omissions, the High Court concluded that the matter required a fresh adjudication.
Consequently, the appeal filed was allowed and the order passed in the writ petition, as well as the initial adjudication order dated 10th July, 2024, passed under Section 74(9) of the Act, were set aside. The case has been remanded back for a fresh decision on merits, strictly in accordance with the law.
Calcutta High Court Quashes GST Order
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