The Calcutta High Court has set aside the GST (Goods and Services Tax) Assessment Order passed under the West Bengal GST Act. The court noted that the IGST credit was utilised by the assessee for the payments of CGST and SGST, in which the SGST payment subsequently flowed to the State of West Bengal.
The bench of Chief Justice T S Sivagnanam and Justice Hiranmay Battacharya observed that the assessment order, which was the subject-matter of challenge in the writ petition can no longer survive. Thus, the court ordered the refund of the 10% pre-deposit paid by the assessee.
The order was challenged by the appellant/assessee M/s Cosyn Limited through writ petition W.P.A. 25725 of 2023, which had initially been dismissed on December 4, 2023, on the grounds that the assessment order was appealable.
The intra-Court appeal was heard on December 22, 2023, during which the impugned assessment order was stayed, contingent on the appellant depositing 10% of the disputed tax amount, a condition that was duly complied with.
Following extensive hearings, the Court issued a comprehensive order on April 2, 2024. The Court noted the lack of a specific response from the State of West Bengal to the appellant’s contention regarding the utilisation of input tax credit (ITC) for payment of Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST).
The appellant submitted that the ITC, initially used for payment of CGST and SGST, was transferred and appropriated to the respective State in accordance with Section 18(a) and (c) of the GST Settlement of Fund Rules, 2017.This argument, important to the appellant’s case, was not specifically addressed in the State’s affidavit-in-opposition.
Acknowledging the importance of this contention, the Court directed the State’s counsel to obtain specific written instructions from the appropriate authority.Additionally, the State of Telangana, a party to the case, was served, and their representation was noted during the proceedings.
On April 26, 2024, the Deputy Commissioner of Revenue, Bowbazar Charge, submitted written instructions confirming that the amount of Rs.63,71,353, which was utilised as ITC for payment of SGST, had indeed been transferred to the Government of West Bengal.
Considering these submissions, the High Court Court concluded that the assessment order in question could not be sustained. Consequently, the Court allowed the appeal, set aside the order dismissing the writ petition, and quashed the impugned assessment order. The Court also directed the respondent department to refund the 10% pre-deposit made by the appellant within eight weeks from the date of receipt of the order.
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