Basanta Kumar Shaw, Proprietor of M/s. N.M.D. Engineering Works Vs Assistant Commissioner of Revenue, Commercial Taxes and State Tax, Tamluk Charge, and Others (Calcutta High Court)
The case of Basanta Kumar Shaw vs. Assistant Commissioner of Revenue involves a writ petition filed by the appellant challenging an order passed by the first respondent on May 23, 2022. The order disallowed the debit of IGST from the appellant’s electronic credit ledger under Rule 86A of the Central Goods and Services Tax Rules (CGST) and the West Bengal Goods and Services Tax Rules (WBGST), following a mismatch in the input tax credit (ITC) details provided by the appellant and their suppliers. The mismatch was noted in tax periods from April 2018 to March 2021, leading to allegations of ineligible or fraudulent tax credit claims. Despite being served with show-cause notices in January and February 2022, the appellant failed to respond on time, and as a result, the electronic credit ledger was blocked, preventing further claims of credit.
The respondent’s counsel argued that Rule 86A permits the blocking of credit if there is a belief that the credit was fraudulently availed or is ineligible. The court highlighted that the term “available” in Rule 86A refers to credit that was present in the ledger at the time of the alleged fraudulent or ineligible claim. It also noted that the blocking of credit is not directly related to the actual recovery of taxes but is a measure to ensure that ineligible credits are not utilized for further liabilities or refunds. The appellant’s failure to respond within the prescribed timeframe and the fact that proceedings had already begun under Section 73/74 of the Act were emphasized. The Calcutta High Court directed the respondent to expeditiously conclude the adjudication process and pass the necessary orders within eight weeks, provided the appellant cooperates in the proceedings.
