Mechanical Rejection of ITC Claim for Alleged Non-Existent Supplier Quashed by Calcutta HC

Shyamalmay Paul Vs Assistant Commissioner of State Tax (Calcutta High Court)

The writ petition was filed by a registered person under the West Bengal Goods and Services Tax Act, 2017, challenging the appellate order dated January 20, 2025, which affirmed an adjudication order dated April 15, 2024. The authorities alleged that the petitioner had wrongly claimed Input Tax Credit (ITC) for supplies made during March 26–28, 2019, on the ground that the supplier was later found to be non-existent and non-operational at its declared place of business. The adjudicating authority held the ITC to be ineligible and directed recovery along with interest under Section 50 and penalty under Section 73(9) of the WBGST/CGST Act. The appellate authority dismissed the appeal and affirmed the order.

Before the High Court, the petitioner contended that the supplier was duly registered and operational at the time of supply and that the subsequent retrospective cancellation of registration was itself under challenge in a separate writ proceeding. It was argued that detailed documentary evidence had been produced at every stage, including tax invoices, e-way bills, RTGS payment details, certificates regarding delivery terms and transportation cost, ledger accounts, GSTR-2A summaries, and records showing that the supplier had filed GSTR-1 and GSTR-3B returns for the relevant period. According to the petitioner, both authorities failed to consider these materials and mechanically concluded that there was no physical movement of goods.