Case Law Details
Gargo Traders Vs. Joint Commissioner, Commercial Taxes (State Tax) & Ors. (Calcutta High Court)
In a significant decision, the Calcutta High Court clarified that Input Tax Credit (ITC) cannot be denied to a genuine buyer when the registration of the supplier is cancelled retrospectively. The case in point, Gargo Traders Vs. Joint Commissioner, Commercial Taxes, underscores the rights of the registered taxable person (RTP) who had claimed credit of input tax against supply from a supplier.
The key concern for Gargo Traders was the refusal of the respondent authorities to grant the ITC benefit for purchases from the supplier, who was later revealed to be fraudulent. This led to the challenging of the order and raising the contention that the transactions in question were legitimate, backed by due diligence on the part of the petitioner. The court acknowledged that at the time of the transaction, the supplier’s details were available as valid on the government portal.
A significant turning point came with the referencing of previous judgements, particularly from the case of M/s Law Industries Limited & Ors., which clearly supported the petitioner’s stand. It was established that the cancellation of the supplier’s registration with retrospective effect shouldn’t be grounds for rejecting a genuine buyer’s refund application.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
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