Cancellation of GST Registration with Retrospective Effect Cannot be Ground to Deny ITC from Supplier to Purchaser: Calcutta HC
Calcutta High Court in the case of M/s. Gargo Traders has ruled that the cancellation of Goods and Service Tax (GST) Registration with retrospective effect cannot be a ground to deny Input Tax Credit (ITC) from the supplier to the purchaser.
The petitioner, M/s. Gargo Traders, being the registered taxable person (RTP) claimed credit of input tax against supply made from a supplier. As per the ledger account of the petitioner for the period from 01.04.2018 to 31.03.2019, the total purchase credit was Rs. 13,04,586/-. The petitioner has filed a tax invoice cum chalan reflecting a purchase of Rs. 11,31,513.00 from Global Bitumen.
The petitioner is aggrieved by the impugned order issued by the Joint Commissioner, State Tax, West Bengal, for not allowing the petitioner, who is the purchaser of goods in question and refusing to grant the benefit of Input Tax Credit (ITC) on purchase from supplier and also asking the petitioner to pay penalty and interest under the relevant provisions of the GST Act.
The case of the respondents that on inquiry, they came to know that the supplier from whom the petitioner claimed to have purchased the goods in question are all fake and non-existing and the bank accounts open by the supplier is on the basis of fake document and the claim of the petitioner of Input Tax Credit are not supported by any relevant document.
It was further the case of the respondent that the petitioner has not verified the genuineness and identity of the supplier whether is a Registered Taxable Person (RTP) before entering into any transaction with the supplier.
The Counsel for the petitioner submitted that the authorities have not considered the tax invoice cum challan, debit note, e-Way Bill, transportation bill, statement of bank account of HDFC Bank of the petitioner showing the transaction made by the petitioner in favour of the supplier. and from the said documents, it is crystal clear that the petitioner has purchased the goods from the supplier and had transported the said goods and also transferred the amount through bank in the account of the supplier.
The Court of Justice Krishna Rao observed that “Admittedly at the time of transaction, the name of the supplier as registered taxable person was already available with the Government record and the petitioner has paid the amount of purchased articles as well as tax on the same through bank and not in cash.” “This Court finds that without proper verification, it cannot be said that there was any failure on the part of the petitioner in compliance of any obligation required under the statute before entering into the transactions in question. The respondent authorities only taking into consideration of the cancellation of registration of the supplier with retrospective effect have rejected the claim of the petitioner without considering the documents relied by the petitioner” the Bench noted.