2023 (6) TMI 533 - HC - GST

Tax Credit Claim Reinstated: Procedural Fairness Prevails, Authorities Must Reassess Evidence Within Eight Weeks

M/s. Gargo Traders Versus The Joint Commissioner, Commercial Taxes (State Tax) & Ors.

HC allowed petitioner's appeal challenging tax credit rejection. Court found no evidence of fraud, noting genuine bank payments and proper supplier ... Denial of Input Tax Credit (ITC) - Cancellation of registration of supplier - rejection of claim of the petitioner without considering the documents relied by the petitioner - violation of principles of natural justice - Reliance of Judgement of HC in M/S LGW INDUSTRIES LIMITED [ 2021 (12) TMI 834 - CALCUTTA HIGH COURT] - HELD THAT:- The main contention of the petitioner that the transactions in question are genuine and valid and relying upon all the supporting relevant documents required under law, the petitioner with due diligence verified the genuineness and identity of the supplier and name of the supplier as registered taxable person was available at the Government Portal showing its registration as valid and existing at the time of transaction - Admittedly at the time of transaction, the name of the supplier as registered taxable person was already available with the Government record and the petitioner has paid the amount of purchased articles as well as tax on the same through bank and not in cash. 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 of the cancellation of registration of the supplier with retrospective effect have rejected the claim of the petitioner without considering the documents relied by the petitioner. The impugned orders are set aside. The respondent no. 1 is directed to consider the grievance of the petitioner afresh by taking into consideration of the documents which the petitioner intends to rely in support of his claim - Petition disposed off. Issues involved:The petitioner challenges the rejection of appeal by the Joint Commissioner, State Tax, West Bengal, seeking Input Tax Credit (ITC) on purchases from a supplier, along with penalty and interest under GST Act.Judgment Details:1. The petitioner, a registered taxable person, claimed credit of input tax against supplies made from a supplier. The petitioner's ledger showed total purchase credit of Rs. 13,04,586. The petitioner purchased goods from Global Bitumen and paid through bank. 2. The petitioner disputes the order denying ITC, alleging the supplier is fake and non-existing. Respondents claim supplier's registration was cancelled retrospectively, covering the transaction period.3. The petitioner submitted additional documents supporting the transactions, asserting genuine purchases and payments made through bank.4. Petitioner relied on legal judgments highlighting that mere allegation of fake credit cannot justify rejecting refund application without proof of non-receipt of goods or non-payment.5. Respondents argue supplier's registration was cancelled before the transaction date, making the petitioner's reliance on the supplier's authenticity irrelevant.6. The Court found the petitioner diligently verified supplier details, paid through bank, and no collusion was alleged. Lack of proper verification by authorities led to rejection based solely on retrospective cancellation of supplier's registration.7. The Court referenced an unreported judgment supporting the petitioner's case, setting aside the impugned orders and directing reconsideration based on petitioner's supporting documents.8. The respondent is instructed to review the petitioner's claim, considering the submitted documents, and provide a reasoned decision within eight weeks.Conclusion:The High Court of Calcutta ruled in favor of the petitioner, directing a fresh review of the claim with proper consideration of submitted documents within a specified timeframe.