Calcutta High Court Orders Fresh Hearing in ITC Denial Case Under GST

The current civil appeal (M.A.T. No. 2004 of 2022 with I.A. No. CAN 1 of 2022) has been filed by Vishal Kumar Arya (appellant) against the Assistant Commissioner, State Tax, Ultadanga Charge & Ors. (respondent), in Calcutta High Court before the benches comprising Hon’ble Mr Justice T. S. Sivagnanam and Hon’ble Mr Justice Hiranmay Bhattacharyya. The case was heard on January 20, 2023. 

What Is This Case About?

The appellant had earlier filed a writ petition (W.P.A. No. 21605 of 2022) in the High Court, challenging an order issued by the tax authority under Section 74(9) of the West Bengal GST Act, 2017, on June 21, 2022. The section relates to tax evasion, wrong input tax credit (ITC), or undue refund cases under the GST law.

What Happened Before This Appeal?

Earlier, the tax officer had issued a show cause notice (SCN) to the appellant, asking the reason why the specified tax should not be demanded/ITC should not be denied. Appellant submitted his reply, and the personal hearing was fixed on June 20, 2022. However, the appellant did not appear for the hearing on the scheduled date. Appellant gave the reason that they mistakenly missed the hearing date.

On June 21, 2022, the appellant immediately submitted a written request to offer an unconditional apology. Additionally, he asked for one more chance to present his case and documents. However, on the same date, the authority took action against him and issued an order against him without granting him another chance. The order denied the ITC (Input Tax Credit) claimed by the appellant, saying the supplier’s GST registration has been cancelled. On this, the appellant said they had enough documents to prove their purchases and transactions were genuine despite the supplier’s cancellation.

What did High Court Decide?

When the court analysed the case, it said the company should be given a fair opportunity to be heard since the appellant missed the hearing by mistake and had apologised immediately. Since the case involved the denial of ITC (which is serious for a business) and the appellant claimed to have genuine documents, the court thought one more chance should be granted.

Directions given by the Court:

In the final order, the court ruled that the earlier order dated June 21, 2022, will now be treated as an SCN only, not a final order. Remanded the case to the tax authority for fresh consideration. Directed the appellant to file a reply or additional reply with all supporting documents by February 10, 2023. After receiving this, the adjudicating authority must fix a date for a personal hearing. On that date, the appellant must attend without asking for an adjournment. The authority must then consider the reply and documents properly, hear the appellant’s oral submissions, and then pass a speaking order on the merits and in accordance with the law.