[Link].

in

In the given case a notice of demand to the tax payer/ assessee has been issued for reversing the input tax
credit availed by the assessee without conducting prior inquiry on to the supplier.
The assessee/noticee challenged the demand notice before the Hon’ble Calcutta HC where it Hon’ble
court given finding in the favor of assessee.

Against the order passed by the Hon’ble Calcutta HC respondent state tax department challenged the
order passed by Hon’ble High Court before the Hon’ble Apex Court wherein on dated 14.12.2023
Hon’ble court not inclined to interfere the matter under Article 136 of Constitution Of India, accordingly
petition has been dismissed.

ITEM NO.5 COURT NO.13 SECTION XVI

S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (C) No(s).27827-27828/2023

(Arising out of impugned final judgment and order dated 02-08-2023
in MAT No. 1218/2023 02-08-2023 in CAN No.1/2023 passed by the High
Court at Calcutta)

THE ASSISTANT COMMISSIONER OF STATE TAX,

BALLYGUNJGE CHARGE & ORS. Petitioner(s)

VERSUS
SUNCRAFT ENERGY PRIVATE LIMITED & ORS. Respondent(s)

(FOR ADMISSION and IA No.255567/2023-CONDONATION OF DELAY IN

REFILING/CURING THE DEFECTS)

Date : 14-12-2023 These petitions were called on for hearing today.

CORAM :
HON'BLE MRS. JUSTICE B.V. NAGARATHNA
HON'BLE MR. JUSTICE UJJAL BHUYAN

For Petitioner(s) Mr. Maninder Acharya, Sr. Adv.

Ms. Madhumita Bhattacharjee, AOR
Ms. Urmila Kar Purkayastha, Adv.
Ms. Niharika Singh, Adv,
Mr. Akash Mohan Srivastav, Adv.
Ms. Srija Choudhury, Adv.
[Link]
For Respondent(s) Mr. Ankit Kanodia, Adv.
Mr. Ravi Bharuka, AOR
Ms. Megha Agarwal, Adv.

UPON hearing the counsel the Court made the following

O R D E R
Delay condoned.
We have heard learned senior counsel appearing for the
petitioners.
Having regard to the facts and circumstances of this case(s)
and the extent of demand being on the lower side, we are not
inclined to interfere in these matters in exercise of our powers
under Article 136 of the Constitution of India.
Signature Not Verified

Digitally signed by The Special Leave Petitions are dismissed, accordingly.

RADHA SHARMA
Date: 2023.12.15
[Link] IST
Reason: Pending application(s), if any, shall stand disposed of

(RADHA SHARMA) (MALEKAR

NAGARAJ)
COURT MASTER (SH) COURT MASTER (NSH)
[Link]

IN THE HIGH COURT OF JUDICATURE AT

CALCUTTA CIVIL APPELLATE JURISDICTION
APPELLATE SIDE

RESERVED ON:
21.07.2023 DELIVERED
ON:02.08.2023

CORAM:

THE HON’BLE MR. CHIEF JUSTICE T.S.

SIVAGNANAM AND
THE HON’BLE MR. JUSTICE HIRANMAY
BHATTACHARYYA

MAT 1218 OF 2023 WITH

I.A NO. CAN 1 OF 2023

SUNCRAFT ENERGY PRIVATE LIMITED AND

ANOTHER VERSUS

THE ASSISTANT COMMISSIONER, STATE TAX,

BALLYGUNGE

CHARGE AND OTHERS

Appearance:-
Mr. Ankit Kanodia, Adv.
Ms. Megha Agarwal, Adv.
Mr. Jitesh Sah, Adv.
......for the Appellant

Mr. Anirban Ray, Ld. Govt. Pleader

Md. T.M. Siddiqui, Learned A.G.P.
Mr. S. Sanyal, Adv.
......For the State Respondent
[Link]
JUDGMENT

(Judgment of the Court was delivered by T.S. Sivagnanam, CJ.)

1. This intra Court appeal filed by the writ petitioner is directed against the order

passed in WPA 12153 of 2023 dated 21.06.2023. The appellant had impugned

the order passed by the Assistant Commissioner of State Tax, Ballygunge

Charge, the Respondent No. 1 date 20.02.2023 by which the first respondent

reversed the input tax credit availed by the appellant under the provisions of West

Bengal Goods and Services Tax Act, 2017 (WBGST Act). The 4th respondent is

a supplier of the appellant who provided supply of goods and services to the

appellant who had made payment of tax to the fourth respondent at the time of

effecting such purchase along with the value of supply of goods/ services.

However, in some of the invoices of the said supplier was not reflected in the

GSTR 2A of the appellant for the Financial Year 2017-18. The first respondent

issued notices for recovery of the input tax credit availed by the appellant and the

grievance of the appellant is that without conducting any enquiry on the

supplier namely, the fourth respondent and without effecting any recovery from

the fourth respondent, the first respondent was not justified in proceeding against

the appellant. It is seen that a scrutiny of the return submitted by the appellant

was made under Section 61 of the Act for the Financial Year 2017-18 which was

followed by a notice dated 03.08.2022 stating that certain discrepancies were

noticed. The appellant had submitted their reply dated 24.08.2022. Thereafter the

appellant was served with the show-cause notice dated 06.12.2022 proposing a

demand as to the excess ITC claimed by the appellant for the Financial Year

2017-18 on the basis of the difference of the

[Link]
amount of ITC in Form GSTR-2A and Form GSTR-3B with respect to the

purchase transaction made by the appellant with the fourth respondent. The

appellant filed detailed replies on 06.01.2023 and 11.01.2023, denying the

allegations made in the show-cause notice and among other things

submitted that the appellant had made payment of tax to the fourth

respondent arising from the transaction and thereafter availed ITC on the

said purchase. The show-cause notice was adjudicated and by order dated

20.02.2023 a demand for payment of tax of Rs. 6,50,511/- along with

applicable interest and penalty was confirmed under Section 73(10) of the

Act. Challenging the said order, the appellant had filed the writ petition. The

learned Single Bench by the impugned order disposed of the writ petition by

directing the appellant to prefer a statutory appeal before the appellate

authority after complying with the requisite formalities and the appellate

authority was directed to dispose of the appeal without rejecting the same

on the ground of limitation. Aggrieved by such order, the appellant has

preferred the present appeal.

2. We have heard Mr. Ankit Kanodia assisted by Ms. Megha Agarwal and Mr.

Jitesh Sah, learned Advocates for the appellant and Mr. T.M. Siddique, learned

Government Counsel for the respondent.

3. For a dealer to be eligible to avail credit of any input tax, the conditions

prescribed in Section 16 (2) of the Act have to be fulfilled. Sub-section (2) of

Section 16 commences with a non-obstante clause stating that notwithstanding

anything contained in Section 16 no registered person shall be entitled to credit of

any input tax in respect of any supply of goods or services or both to him unless-
[Link]
(a) he is in possession of tax invoice or debit note issued
by a supplier registered under this Act, or such other
tax paying documents as may be prescribed;
(b) he has received the goods or services or both;
(c) subject to the provisions of Section 41 or Section
43A, the tax charged in respect of such supply has
been actually paid to the Government, either in cash
or through utilization of input tax credit admissible in
respect of such supply; and
(d) he has furnished the return under Section 39.

4. It is the case of the appellant that they have fulfilled all the conditions as

stipulated under Sub-section (2) of Section 16 and they also paid the tax to the

fourth respondent, the supplier and a valid tax invoice has been issued by the

fourth respondent for installation and commission services and the appellant

had made payment to the fourth respondent within the time stipulated under the

provisions of the Act. Thus, grievance of the appellant is that despite having

fulfilled all the conditions as has been enumerated under Section 16(2) of the

Act, the first respondent erred in reversing the credit availed and directing the

appellant to deposit the tax which has already been paid to the fourth respondent

at the time of availing the goods/ services. In support of his contention, the

learned Counsel for the appellant had placed reliance on the decision of the

Hon’ble Supreme Court in Union of India (UOI) Versus Bharti Airtel Ltd. And

Ors.1 The learned Advocate for the appellant also placed reliance on the press

release dated 18.10.2018 issued by the Central Board of Indirect Tax and

Customs and also the press release dated 04.05.2018 to substantiate their

argument

1
(2022) 4 SCC 328
[Link]
that the ground on which the first respondent had passed the impugned

order of recovery of tax is wholly unsustainable.

5. In the press release dated 18.10.2018 a clarification was issued stating that

furnishing of outward details in Form GSTR-1 by the corresponding supplier(s)

and the facility to view the same in Form GSTR-2A by the recipient is in the

nature of taxpayer facilitation and does not impact the ability of the taxpayer to

avail ITC on self-assessment basis in consonance with the provisions of Section

16 of the Act. Further, it has been clarified that the apprehension that ITC can

be availed only on the basis of reconciliation between Form GSTR-2B and Form

GSTR-3B conducted before the due date for filing of the return in Form GSTR-

3B for the month of September, 2018 is unfounded and the same exercise can be

done thereafter also. In the press release dated 4th May, 2018, it was clarified

that there shall not be any automatic reversal of input tax credit from buyer on

non- payment of tax by the seller. In case of default in payment of tax by the

seller, recovery shall be made from the seller however, reversal of credit from

buyer shall also be an option available with the revenue authorities to address

exceptional situations like missing dealer, closure of business by supplier or

supplier not having adequate assets etc.

6. The effect and purport of Form GSTR-2A was explained by the Hon’ble Supreme

Court in Bharti Airtel Ltd. It was held that Form GSTR-2A is only a facilitator

for taking a confirm decision while doing such self-assessment. Non-performance or

non-operability of Form GSTR-2A or for that matter, other forms will be of no

avail because the dispensation stipulated at the relevant time obliged the registered

persons to submit return on the basis of

[Link]
such self-assessment in Form GSTR-3B manually on electronic platform. In

Arise India Limited and Ors. Versus Commissioner of Trade and Taxes,

Delhi and Ors.2, the challenge was to the constitutional validity of Section

9(2)(g) of the Delhi Value Added Tax Act, 2004 (DVAT Act) as being

violative of Article 14 of 19(g) of the Constitution of India. Section 9(2) of the

DVAT Act sets out the conditions under which tax credit or ITC would not

be allowed. Sub-clauses (a) to (f) specify certain kinds of purchase which

would not be eligible for the claim of ITC. Clause (g) of the Section 9(2) of

the DVAT Act states that to the dealers or class of dealers unless the tax paid

by the purchasing dealer has actually been deposited by the selling dealer

with the Government or has been lawfully adjusted against output tax

liability and correctly reflected in the return filed for the respective tax

period, would not be eligible for claim of ITC. The question that arose for

consideration was as to whether for the default committed by the selling

dealer can the purchasing dealer be made to bear the consequences of the

denying the ITC and whether it is the violation of Article 14 of the

Constitution. After taking note of the language used in Section 9(2)(g) of the

DVAT Act where the expression “dealer or class of dealers” occurring in

Section 9(2)(g) of the DVAT Act should be interpreted as not including a

purchasing dealer who has bona fide entered into purchase transaction with

validly registered selling dealer who have issued tax invoices in accordance

with Section 15 of the said Act where there is no mismatch of transactions

in Annexures 2A and 2B and unless the expression “dealer or class of

dealers” in Section 9(2)(g) is read down in the said manner, the entire

provision would have to2 MANU/DE/3361/2017

[Link]
be held to be violative of Article 14 of the Constitution. It was further held

that the result of such reading down would be that the department is

precluded from invoking Section 9(2)(g) of DVAT Act to deny the ITC to the

purchasing dealer who had bona fide entered into a purchase transaction

with the registered selling dealer who had issued a tax invoice reflecting the

TIN number and in the event that the selling dealer has failed to deposit the

tax collected by him from the purchasing dealer, the remedy for the

department would be to proceed against a defaulting selling dealer to

recover such tax and not denying the purchasing dealer the ITC. It was

further held that where however, the department is able to come across

material to show that the purchasing dealer and the selling dealer acted in

collusion then the department can proceed under Section 40A of the DVAT

Act. With the above conclusion, the default assessment orders of tax interest

and penalty were set aside. The decision in Arise India Limited was

challenged before the Hon’ble Supreme Court by the Government in

Commissioner of Trade and Taxes, Delhi Versus Arise India Limited and

the special leave petition was dismissed by judgment dated 10.01.2018,

reported in MANU/SCOR/01183/2018. Though the above decision arose

under the provisions of the Delhi Value Added Tax Act, the scheme of

availment of Input Tax Credit continues to remain the same even under the

GST regime though certain procedural modification and statutory forms

have been made mandatory.

7. In the show cause notice dated 06.12.2022, the allegation was that the

appellant had submitted that the fourth respondent has not shown the Bill in

GSTR 1 and hence the appellant is not eligible to avail the credit of the
[Link]
input tax as per Section 16(2) of the WBGST Act, 2017 as the tax charged in

respect of such supply has not been actually paid to the Government. The

show cause notice does not allege that the appellant was not in possession of

a tax invoice issued by the supplier registered under the Act. There is no

denial of the fact that the appellant has received the goods or services or

both.

8. In the reply submitted by the appellant to the said show cause notice the appellant

had clearly stated that they are in possession of the tax invoice, they had

received the goods and services or both and the payment has been made to the

supplier of the goods or services or both. The reason for denying the input tax

credit is on the ground that the detail of the supplier is not reflecting in GSTR 1

of the supplier. The appellant had pointed out that they are in possession of a

valid tax invoice and payment details to the supplier have been substantiated by

producing the tax invoice and the bank statement. The appellant also referred to

the press release dated 18.10.2018. What we find is that the first respondent has

not conducted any enquiry on the fourth respondent supplier more particularly

when clarification has been issued where furnishing of outward details in Form

GSTR 1 by a corresponding supplier and the facility to view the same in Form

GSTR 2A by the recipient is in the nature of tax payer facilitation and does not

impact the ability of the tax payers to avail input tax credit on self-assessment

basis in consonance with the provisions of Section 16 of the Act. Furthermore, it

was clarified that there shall not be any automatic reversal of input tax credit

from buyer on non-payment of tax by seller. Further it is clarified that in case of

default in payment of tax by the seller

 [Link]
recovery shall be made from the seller however, reversal of credit from the

buyer shall also be an option available with the revenue authorities to

address the exceptional situations like missing dealer, closure of business

by supplier or supplier not having adequate assets etc.

9. The first respondent without resorting to any action against the fourth respondent

who is the selling dealer has ignored the tax invoices produced by the appellant

as well as the bank statement to substantiate that they have paid the price for

the goods and services rendered as well as the tax payable there on, the action of

the first respondent has to be branded as arbitrarily. Therefore, before directing

the appellant to reverse the input tax credit and remit the same to the government,

the first respondent ought to have taken action against the fourth respondent the

selling dealer and unless and until the first respondent is able to bring out

the exceptional case where there has been collusion between the appellant and the

fourth respondent or where the fourth respondent is missing or the fourth

respondent has closed down its business or the fourth respondent does not have

any assets and such other contingencies, straight away the first respondent was

not justified in directing the appellant to reverse the input tax credit availed by

them. Therefore, we are of the view that the demand raised on the appellant

dated 20.02.2023 is not sustainable.

10. In the result, the appeal is allowed, the orders passed in the writ petition is set

aside and the order dated 20.02.2023 passed by the first respondent namely the

Assistant Commissioner, State Tax, Ballygaunge Charge, is set aside with a

direction to the appropriate authorities to first proceed against the fourth

respondent and only under exceptional

circumstance as clarified in the press release issued by the Central Board of

Indirect Taxes and Customs (CBIC), then and then only proceedings can be
[Link]

initiated against the appellant. With the above observations and directions the

appeal is allowed.

(T.S. SIVAGNANAM, CJ.)

(HIRANMAY BHATTACHARYYA, J.)

(P.A – PRAMITA/SACHIN

TEAM MAJESTY LEGAL

OFFICE : B-87, Alaknanda Apartment, G-1, Ganesh Marg/Moti Marg, Bapu Nagar, Jaipur,
Rajasthan-302015.
[Link]
CHAMBER : 204, E-Block, Rajasthan High Court, Jaipur.
MOBILE No. : 9785461395
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