Case Law Details
Lokenath Construction Private Limited Vs Tax/Revenue Government of West Bengal and Others (Calcutta High Court)
The case of Lokenath Construction Private Limited versus Tax/Revenue Government of West Bengal and Others, heard in the Calcutta High Court, addresses the issue of recovery proceedings against a recipient without proper inquiry with the supplier in matters of tax credit under the GST Act.
In the case, the appellant challenged a show-cause notice issued by the WBGST Authorities, contending that it was issued without verifying with the supplier and denying credit to the appellant. The court directed the appellant to file objections, instructed the authority to consider the objections, and prohibited coercive action until the objections were disposed of.
Subsequently, the authority adjudicated the show-cause notice and confirmed the demand. However, the court found that certain findings made by the authority were beyond the scope of the allegations in the notice. Specifically, the authority questioned whether the appellant had received certain services without conclusive evidence, which was not part of the initial allegations. Moreover, the authority rejected certificates issued by Chartered Accountants without providing the appellant an opportunity to clarify.
The court referred to the precedent set in the case of Suncraft Energy Private Limited, which emphasized that recovery proceedings cannot be initiated against a recipient without proper inquiry with the supplier. The court noted that even the show-cause notice admitted that the appellant had paid tax to the supplier, but the tax had not been remitted to the government. In such cases, the court held, the fundamental principle is to conduct an inquiry with the supplier before penalizing the recipient.
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