Appellant fails to appear for three hearings, cannot bypass statutory appeal process for ITC disallowance under Section 16

The Calcutta HC dismissed an appeal challenging disallowance of Input Tax Credit (ITC). The adjudicating authority issued three notices for personal hearing on 17th January, 31st January, and 15th February 2024, but the appellant failed to appear. The HC held this was not a violation of natural justice principles since adequate opportunity was provided but not utilized by the appellant. The court found the appellant, being in business for over 19 years, was well-versed with taxation law requirements and statutory procedures. The HC ruled the appellant was not justified in bypassing the statutory appellate remedy and should have filed a statutory appeal before the appellate authority first. The Single Bench correctly relegated the appellant to pursue the proper statutory appeal process. Appeal dismissed.

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ISSUES:

Whether the Input Tax Credit availed by the appellant was irregular and liable to be disallowed under Section 73(9) of the CGST Act, 2017 read with corresponding provisions of the W.B.G.S.T. Act, 2017 and Section 20 of the I.G.S.T. Act, 2017.Whether the appellant was denied adequate opportunity of personal hearing before the adjudicating authority, thereby violating principles of natural justice.Whether the appellant can bypass the statutory appellate remedy on the ground of inability to make the required pre-deposit for filing an appeal.Whether the adjudicating authority's order for recovery of excess Input Tax Credit, short payment of tax, interest, and imposition of penalty is sustainable.

RULINGS / HOLDINGS:

Input Tax Credit availed by the appellant was rightly disallowed as "irregular" under Section 73(9) of the CGST Act, 2017 and corresponding provisions, and recovery along with interest and penalty was correctly ordered.The appellant was not denied adequate opportunity of personal hearing; notices were issued on three separate occasions, but the appellant failed to appear, thus there was no violation of the "principles of natural justice."The appellant is not justified in bypassing the statutory appellate remedy despite failure to pay the substantial pre-deposit; the learned Single Bench correctly relegated the appellant to avail the statutory appellate remedy.The order impugned was rightly upheld, and the appeal was dismissed with liberty granted to file appeal before the Commissioner of Central Tax (Appeal - I) within 60 days subject to pre-deposit condition, with assurance that limitation will not be a ground for rejection and appeal will be decided on merits after due opportunity.

RATIONALE:

The Court applied the statutory provisions under Section 73(9) of the CGST Act, 2017, corresponding provisions of the W.B.G.S.T. Act, 2017, and Section 20 of the I.G.S.T. Act, 2017 concerning Input Tax Credit disallowance and recovery.The Court emphasized adherence to "principles of natural justice," noting that multiple notices for personal hearing were issued but not availed by the appellant, negating any claim of denial of opportunity.The Court recognized the statutory appellate framework requiring pre-deposit for filing appeals and rejected the appellant's plea to bypass this remedy despite the financial burden, underscoring the appellant's long-standing business experience and awareness of statutory requirements.The Court noted that a Director of the appellant had responded to summons and admitted violations, undermining the appellant's claim of inability or ignorance to appear for hearings.No dissent or doctrinal shift was indicated; the judgment affirmed the established procedural and substantive tax law principles.

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