Case Law Details
Asian Hotels (East) Ltd. & Anr. Vs Deputy Commissioner of State Tax & Ors. (Calcutta High Court)
The dispute in the case of Asian Hotels (East) Ltd. & Anr. Vs Deputy Commissioner of State Tax & Ors. centers around an order issued on March 30, 2024, under Section 73(9) of the West Bengal/Central Goods and Services Tax Act, 2017. The order raised a demand on Asian Hotels (East) Ltd. for allegedly availing Input Tax Credit (ITC) in violation of Section 16(2)(a) of the Act. The violation was based on the fact that M/s. Crystolyte Facility Management Pvt. Ltd., the supplier from whom Asian Hotels (East) Ltd. had procured services, had closed down its business operations for the financial year 2018-19. This closure was used as the basis for the contention that the ITC availed by Asian Hotels (East) Ltd. was improper.
Submission of Evidence and Legal Precedents
When the writ petition was initially heard, the Calcutta High Court permitted the petitioners to submit supplementary evidence, particularly a printout from the GST portal showing the filing status of M/s. Crystolyte Facility Management Pvt. Ltd. The supplementary affidavit presented in court demonstrated that M/s. Crystolyte Facility Management Pvt. Ltd. had indeed filed its returns in GSTR 3B for the tax period of 2018-19, although its GST status was later updated to “suo motu cancelled” as of April 6, 2021. This evidence suggested compliance with the GST provisions by the supplier during the relevant period.
Relying on a press release from the Ministry of Finance dated May 4, 2018, the petitioners argued that there should be no automatic reversal of ITC from the buyer in cases where the seller defaults in tax payment. The press release clarified that recovery should be directed at the seller, with reversal of credit from the buyer being an option only in exceptional circumstances, such as when the seller is missing, has closed their business, or lacks adequate assets. The petitioners contended that, at the relevant time, the supplier had complied with the GST requirements and no recovery steps were initiated against M/s. Crystolyte Facility Management Pvt. Ltd. The petitioners cited the Division Bench ruling in Suncraft Energy Private Limited & Anr. v. Assistant Commissioner, State Tax, Ballygunge Charge & Ors., which supported their position that this situation did not qualify as an exceptional case warranting action against them.
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