Court Overturns Tax Credit Reversal Due to Lack of Seller's Registration Details, Emphasizes Fairness in Tax Directives.

The HC of Calcutta allowed the appeal, setting aside the directive requiring the appellant to reverse input tax credit without details of the selling dealer's registration cancellation. The Court found this action violated principles of natural justice. The authority was instructed to remit the reversed credit amount to the appellant's electronic ledger within 10 days. The judgment underscored the necessity for procedural fairness and detailed communication in tax-related directives. No costs were awarded, and a certified order copy was to be provided upon request.

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Issues Involved:
The judgment involves the consideration of whether the respondent department could direct the appellant/assessee to reverse the input tax credit without providing details of the cancellation of the selling dealer's registration.

Summary:
The High Court of Calcutta, comprising Justice T. S. Sivagnanam and Justice Hiranmay Bhattacharyya, heard an intra-Court appeal challenging an order that declined to grant interim relief but directed affidavits to be filed. The appellant contested the order, arguing that the respondent department had directed them to reverse input tax credit without providing details of the cancellation of the selling dealer's registration. The Court observed that such a directive without furnishing relevant details to the appellant was not tenable in law and violated principles of natural justice. The Court allowed both the appeal and the writ petition, setting aside the communication from the authority and directing the authority to remit the reversed input tax credit amount to the appellant's electronic credit ledger within 10 days. The judgment emphasized that the respondent department could initiate appropriate action in accordance with the law if necessary. No costs were awarded, and a certified copy of the order would be provided to the parties upon request.

This judgment highlighted the importance of procedural fairness and the need for authorities to provide sufficient details when directing actions that impact parties' rights, particularly in matters concerning tax credits and registrations.

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