ITC cannot be Denied due to Cancellation of GST Registration with retrospective effect: Calcutta HC [Read Order]

A Division Bench of the Calcutta High Court (HC) ruled that Input Tax Credit (ITC) cannot be Denied due to Cancellation of GST Registration with retrospective effect.

The respondents in the writ petition is LGW Industries Limited &Ors.The intra court appealis against a common judgment and order passed by the Single Judge though there spondents /writ petitioners, had sought for a larger relief in the writ petition mainly for issuance of writ of declaration to declare Section 16(2) (c) of the CGST Act/WBGST Act as unconstitutional.

The Prayer also includes that in the event, the Court holds the provision to be constitutional to read over how the provision by holding that input tax credit will be denied only where the purchasers are proved to be collusive and in the nature of sham transaction. 

The Government counsel for the appellant would submit that the writ petition itself was premature and certain other writ petitions were pending where constitutional validity of the said provision namely Section 16(2)(c) of the CGST Act/ WBGST Act has been challenged and is still pending before the Single Judge. Therefore, it is submission of the Government Counsel that the State has preferred these appeals on the said grounds. 

The Counsel for the respondents/writ petitioners submitted that the reason why the other writ petitions have been segregated and kept pending is on account of fact situation of those cases and those writ petitions which were disposed of by the impugned order. 

The Counsel further contended that the only reason for declining the input tax credit was on the ground that the selling dealers’ registration was cancelled with retrospective effect.  Be that as it may, the larger relief sought for by the writ petitioners mainly writ of declaration has not been granted by the Single Judge.  The writ petitioners are not on appeal as against the said finding.

A Division Bench comprising Justice TS Sivagnanam and Justice SupratimBhattacharya observed that “In such circumstances, we are of the view that the directions issued by the Single Judge were not only in the interest of the respondents/writ petitioners, but also would safeguard the interest of the revenue.”

“We say so, because the matter has been sent back to the appellant authority to enable verification of documents, correspondences exchanged between the Department and the respondents/writ petitioner which have been referred to as memo” the Court noted.

To Read the full text of the Order CLICK HERE

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