Case Law Details
Barun Kumar Biswas Vs Union of India and anr. (Calcutta High Court)
The Calcutta High Court allowed a writ petition challenging the legality and validity of an order dated 3 December 2025 that denied the petitioner Input Tax Credit (ITC) on invoices issued by the supplier, M/s. Adrian Infra Services Private Ltd., during the period from April 2021 to June 2021. The dispute arose after the supplier’s GST registration was retrospectively cancelled with effect from 28 November 2019, resulting in the respondent authorities treating the invoices issued between April 2021 and July 2021 as invalid under Section 16 read with Section 31 of the Central Goods and Services Tax Act, 2017, Rule 36 of the Central Goods and Services Tax Rules, 2017, and Instruction No. 02/2022-GST dated 22 March 2022. Consequently, the adjudicating authority held that the petitioner had irregularly availed ITC amounting to ₹1,24,16,354 (CGST ₹62,08,177 and SGST ₹62,08,177) under Section 73(9) of the CGST Act and the corresponding provisions of the West Bengal GST Act. Thereafter, a show cause notice dated 10 September 2025 was issued under Section 73 for the financial year 2021-22. The petitioner filed a reply asserting that all conditions prescribed under Section 16(2) of the CGST Act had been fulfilled while availing the ITC.
The petitioner challenged the retrospective cancellation of the supplier’s registration and the consequential invalidation of invoices, contending that such retrospective cancellation was arbitrary, illegal, and contrary to Section 16(2) of the CGST Act, the relevant Rules, and CBIC Instruction No. 02/2022-GST dated 22 March 2022. It was argued that retrospective cancellation could not invalidate invoices issued during the period when the supplier remained registered and active on the GST portal.
The respondent authorities opposed the petition, relying upon the pleadings to contend that the petitioner had illegally availed ITC on invoices issued by a supplier whose registration had been cancelled retrospectively from 28 November 2019.
In response, the petitioner reiterated that the supplier’s registration had been cancelled only retrospectively and that such cancellation should not affect invoices issued while the supplier was operational on the GST portal. The petitioner relied upon earlier decisions of Coordinate Benches of the Calcutta High Court, which held that authorities must reconsider ITC claims by examining the documents produced to establish the genuineness of transactions, verify whether payment for purchases along with GST had actually been made to the supplier, and determine whether purchases occurred before or after cancellation of the supplier’s registration while considering compliance with statutory verification requirements.
The petitioner also relied on the decision in Shyamalmay Paul v. Assistant Commissioner, SGST, where the appellate authority’s order on a particular discrepancy was set aside and the matter was remanded with a direction to pass a reasoned order after granting an opportunity of hearing. Further reliance was placed on the Division Bench judgment in Jyoti Tar Products (P.) Ltd. v. Deputy Commissioner, State Tax, Shibpur Charge, where the Court observed that the pre-show cause notice only alleged cancellation of suppliers’ registrations and held that the adjudicating authority had failed to examine all relevant factual issues. The Division Bench directed fresh adjudication after permitting the assessee to submit a fresh reply along with supporting judicial precedents.
After hearing both parties and examining the available records, the High Court held that the petitioner had established a prima facie case warranting judicial interference. The Court directed the respondent authorities to revisit the issue and reconsider the petitioner’s entitlement to ITC in light of the two Division Bench judgments relied upon by the petitioner. The reconsideration was directed to be completed within eight weeks by passing a reasoned order in accordance with law, and the decision was to be communicated to the petitioner within one week thereafter.
Accordingly, the High Court quashed and set aside the order dated 3 December 2025, allowed the writ petition, and observed that since affidavits had not been called for, the allegations in the writ petition would be deemed to have been denied and not admitted.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
1. The petitioner in the instant case challenges , inter alia, the legality and validity of the order dated 3.12.2025 passed by the respondent no.2
2. The main grievance of the petitioner is with regard to the denial of eligible Input Tax Credit on valid invoices issued by the supplier M/s. Adrian Infra Services Private Ltd. during the period from April 2021 to June 2021 as per Section 16 read with Section 31 of Central Goods Services Tax 2017 and Rule 36 of Central Goods Service Tax Rules, 2017.
3. The petitioner submits that the respondent authorities have cancelled the supplier’s registration retrospectively from 28.11.2019 thereby, invaliding the invoices issued during the period from April 2021 to July 2021 as per Section 16 read with Section 31 and Rule 36 and instruction No. 02/2022-GST dated 22.03.2022 (para 7 of Annexure B).
4. It is further submitted by the petitioner that the adjudicating authority has held that the petitioner has availed Input Tax Credit irregularly amounting to Rs. 1,24,16,354 (CGST Rs. 62,08,177) and SGST-Rs. 62,08, 177/-) under Section 73 (9) of the CGST Act, 2017 read with the corresponding provisions of the WBGST Act, 2017.
5. Thereafter on 10thSeptember, 2025 a show cause notice has been issued under Section 73 of the Central Goods and Services Act, 2017, (hereinafter referred to as the said Act) for the financial year 2021-2022 by the respondent authority. The petitioner duly submitted its reply to the said show cause notice and contended that it had availed input tax credit (ITC) upon compliance with all the conditions stipulated under Section 16(2) of the said Act.
6. Thereafter the petitioner has challenged the retrospective cancellation of the supplier registration with effect from 28.11.2019 and the consequential invalidation of all the invoices issued during the period from April 2021 to July 2021 as being arbitrary, illegal and contrary to the provisions of the Section 16(2) of the said Act and Rules and instruction No. 2/2022-GST dated 22.03.2022 issued by the Central Board of Indirect Taxes and Customs.
7. Learned counsel appearing for the respondent authorities vehemently opposes the same and draws the attention of this Court to paragraph 13 and 14 of the writ petition to demonstrate that the petitioner has illegally availed the ITC, on all invoices issued by the supplier whose registration has already been cancelled suo motu with effect from 28.11.2019.
8. In this context, the petitioner submits by relying upon the paragraph 18 of the writ petition, that the registration has been cancelled by the respondent authorities retrospectively with effect from 28.11.2019 and such retrospective cancellation cannot in-validate invoices issued during the period when the supplier was registered and active on the GST portal.
9. The petitioner places reliance upon a judgement of a Coordinate Bench of this Court with regard to the issue of remaining cases to respondent authorities for considering afresh the issue of the entitlement to the benefit of input tax credit in question, by considering the documents which the petitioner intends to rely upon in support of the claim of genuineness of the transactions and the respondents has been directed to consider whether the payment on purchases in question along with GST were actually paid to the supplier and also to consider whether the purchases were made before or after the cancellation of the registration of the suppliers in compliance of the statutory obligation regarding verification of the identity of the suppliers. A further reliance has also been placed upon a judgment of the Coordinate Bench of this Court wherein it has been observed in the case of Shyamalmay Paul v. Asstt. Commissioner SGST (Calcutta) which is reproduced below:
“22. Accordingly, the order of the appellate authority dated May 16, 2025 insofar as it relates to discrepancy under serial no. 3 is concerned , is set aside.
24. The appellate authority is directed to pass a reasoned order as the discrepancy no. 3 only is concerned after giving an opportunity of hearing to the petitioner to his authorized representative and to communicate the same immediately thereafter.”
10. The petitioner further relies upon another Division Bench’s judgement of this Court in the case of Jyoti Tar Products (P.) Ltd. v. Deputy Commissioner, State Tax Shibpur Charge /108 GST 791/95 GSTL 392 (Calcutta) Calcutta by relying upon paragraphs 16 and 22 which is reproduced below:
“16. However, this appears to be not the allegation in the pre-show cause notice as the only allegation was that the three suppliers registration has been cancelled.
22. The exercise appears to be have not been done by the adjudicating authority and, therefore, we are of the view that the matter has to be readjudicated by taking note of all the factual issues bearing in mind the legal principles laid down in various decisions. Though the reply to the pre-show cause notice dated 6.10.2023 gives the necessary details and the documents which have been annexed , we are of the view that the appellants should submit a fresh reply dealing with all issues with liberty to place the decisions of the various courts on which they seek to place reliance.”
11. After hearing the rival contention of the parties and upon perusal of the available records I find that the petitioner has been able to make out a prima facie case. Interference is warranted at this stage.
12. I direct the respondent to revisit the issue and consider the same in light of the two Division Bench’s judgements within a period of 8 weeks by passing a reasoned order in accordance with law. Such decision shall be communicated within a week thereafter.
13. With the above observation and directions, the Writ Petition is allowed ad disposed of, by quashing and setting aside the Order dated 03.12.2025.
14. Since the affidavit has not been called for, the allegations contained in the writ petition are deemed to have been denied and not admitted.
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