No Denial of ITC if transactions were genuine & supplier registration cancelled thereafter- HC: Calcutta High Court

No Denial of ITC if transactions were genuine & supplier registration cancelled thereafter- HC: Calcutta High Court

In the case of SanchitaKundu vs. Commissioner of State Tax, The Calcutta High Court held that the Input Tax Credit (ITC) cannot be denied on genuine transactions with suppliers whose GST registration was cancelled after the transaction.

The writ petitions were filed by the SanchitaKundu(“The petitioner”) being aggrieved by the action of the respondent GST concerned denying the benefit of Input Tax Credit (ITC) by their impugned order to the petitioner on purchase of the goods in question from the suppliers and asking the petitioners to pay the penalty and interest under the relevant provisions of GST Act, on the ground that the registration of the suppliers in question has already been cancelled with retrospective effect covering the transaction period in question.

The petitioner ​​contended that the transactions in question are genuine and valid by relying upon all the supporting relevant documents required under law and contend that petitioners with their due diligence have verified the genuineness and identity of the suppliers in question and more particularly the names of those suppliers as registered taxable person were available at the Government portal showing their registrations as valid and existing at the time of transactions.

The petitioner submitted that they have limitations in ascertaining the validity and genuineness of the suppliers in question and they have done whatever possible in this regard. When the names of the suppliers as registered taxable persons were already available on the government record and in the government portal at the relevant period of transaction, petitioners could not be faulted if the suppliers appeared to be fake later on

The Petitioner further submit that they have paid the amount of purchases in question as well as tax on the same not in cash and all transactions were through banks and petitioners are helpless if at some point of time after the transactions were over, if the respondents concerned 3 finds on enquiries that the aforesaid suppliers (RTP) were fake and bogus and on this basis petitioners could not be penalised unless the department/respondents establish with concrete materials that the transactions in question were the outcome of any collusion between the petitioners/purchasers and the suppliers in question.

The Petitioners further submit that all the purchasers in question invoices-wise were available on the GST portal in form GSTR-2A which are matters of record.

In this case, The Calcutta High Court held  that it is found upon verification and considering the relevant documents that all the purchases and transactions in question are genuine and supported by valid documents and transactions in question were made before the cancellation of registration of those suppliers.

The court further directed the department to dispose of the case of the petitioner by passing a reasoned and speaking order after giving an effective opportunity of hearing to the petitioners, within eight weeks.