Case Law Details

Case Name : ACIT Vs LGW Industries Limited & ors. (Calcutta High Court)
Appeal Number : MAT 855 of 2022
Date of Judgement/Order : 16/09/2022
Related Assessment Year :

ACIT Vs LGW Industries Limited & ors. (Calcutta High Court)

Hon’ble Division Bench of Calcutta high Court has dismissed the appeal of the department vide its judgment dated 16th September, 2022 in a dispute relating to denial of Input Tax credit due to cancellation of registration of supplier of goods with retrospective effect.

Hon’ble single bench of Calcutta High Court vide its judgment dated 13th December’2021 had held that if it is found upon considering the relevant documents that all the purchases and transactions in question are genuine and supported by valid documents and transactions were made before the cancellation of registration of those suppliers than the benefit of input tax credit shall be given to the petitioners.

Hon’ble single bench of Calcutta High Court had remanded the matter back to the departmental officers to consider afresh the cases of the petitioners on the issue of our entitlement of benefit of input tax credit by considering the documents which they want to rely in support of their claim of genuineness of the transactions by considering whether payments for purchases with GST has been actually paid or not to the suppliers and by also considering whether the transactions and purchases were made before or after the cancellation of registration of the suppliers and the compliance of statutory obligation by the petitioners in verification of identity of the suppliers.

Hon’ble Division bench of Calcutta High Court has dismissed the appeal of the department against the aforesaid order with a direction to the petitioners to submit one more set of documents which they seek to rely upon to the concerned appellant authority within a period of two weeks from the date of receipt of the server copy of the order and on receipt of these documents, the concerned authority shall afford an opportunity of personal hearing to their authorized representative and peruse the documents, take note of the directions issued by the learned Single Judge and proceed to act on merits and in accordance with law and conclude the proceedings as expeditiously as possible preferably within a period of four weeks from the date on which the personal hearing is concluded.

The matter was represented on behalf of the petitioners by Mr. Vinay Shraff with Ms Priya Sarah Paul and Mr. Kaushal Agarwal and on behalf of the department by Mr. A. Ray, ld. G.P. (State), Md. T. M. Siddiqui, ld. A.G.P., Mr. D. Ghosh, Mr. S. Mukherjee, Mr. N. Chatterjee.

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

We have perused the affidavit filed in support of the application for condonation of delay and we are satisfied that sufficient cause have been shown in preferring the instant appeals. Hence, the delay is condoned and the application for condonation of delay is allowed.

Heard at length learned counsel for the parties.

These intra court appeals are directed against a common judgment and order passed by the learned Single Judge dated 13.12.2021 though the respondents/writ petitioners had sought for a larger relief in the writ petition mainly for issuance of writ of declaration to declare Section 16(2) (c) of the CGST Act/WBGST Act as unconstitutional and, in the event, the Court holds the provision to be constitutional to read over how the provision by holding that input tax credit will be denied only where the purchasers are proved to be collusive and in the nature of sham transaction. The respondents/writ petitioners also sought for quashing of the memos dated 28.08.2019 and 11.11.2019 though such larger relief were sought for before the learned writ court direction issued by the learned writ court, in our considered view, is a very innocuous direction.

Learned Government counsel for the appellant would submit that the writ petition itself was premature and certain other writ petitions were pending where constitutional validity of the said provision namely Section 16(2)

(c) has been challenged and is still pending before the learned Single Judge. Therefore, it is submission of the learned Government counsel that the State has preferred these appeals on the said grounds.

Learned counsel for the respondents/writ petitioners submitted that the reason why the other writ petitions have been segregated and kept pending is on account of fact situation of those cases and those writ petitions which were disposed of by the impugned order. The only reason for declining the input tax credit was on the ground that the selling dealers’ registration was cancelled with retrospective effect. Be that as it may, the larger relief sought for by the respondents/writ petitioners mainly writ of declaration has not been granted by the learned Single Judge. The respondents/writ petitioners are not on appeal as against the said finding.

In such circumstances, we are of the view that the directions issued by the learned Single Judge were not only in the interest of the respondents/writ petitioners, but also would safeguard the interest of the revenue. We say so, because the matter has been sent back to the appellant authority to enable verification of documents, correspondences exchanged between the Department and the writ petitioner which have been referred to as memos, we find that the actual adjudication of the dispute has not taken place which is required to be done before an order is passed either accepting or denying the input tax credit.

Therefore, we are of the considered view that no interference is called for to the direction issued by the learned Single Judge.

In the light of the above, both the appeals being MAT 855 of 2022 and MAT 856 of 2022 are dismissed with a direction to the respondents/writ petitioners to submit one more set of documents which they seek to rely upon to the concerned appellant authority within a period of two weeks from the date of receipt of the server copy of this order and on receipt of these documents, the concerned authority shall afford an opportunity of personal hearing to the authorized representative of the respondents/writ petitioners and peruse the documents, take note of the directions issued by the learned Single Judge and proceed to act on merits and in accordance with law and conclude the proceedings as expeditiously as possible preferably within a period of four weeks from the date on which the personal hearing is concluded.

It is made clear that neither the learned writ court nor this Court has adjudicated the merits of the case and it will be open to the respondents/writ petitioners to canvass all the issues both factual and legal before the concerned authority.

Consequently, all the connected applications to both the appeals stand dismissed.

No costs.

Read Also – No Denial of ITC if transactions were genuine & supplier registration cancelled thereafter- HC

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