ITC shall be allowed in case of Genuine Transactions made before Cancellation of GST Registration: Calcutta HC [Read Order]

The Calcutta High Court, relying on the decisions of various High Courts and Supreme Court held that the input tax credit shall be allowed in case of genuine transactions made before the cancellation of GST registration.

The petitioners, Sanchita Kundu &Anr approached the High Court aggrieved by the action of the respondent GST concerned denying the benefit of Input Tax Credit (ITC) 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 petitioners contended that the transactions are genuine and valid by relying upon all the supporting relevant documents required under law and contended that petitioners with their due diligence have verified the genuineness and identity of the suppliers.

Justice Md. Nizamuddin held that “considering the facts as recorded, without any further verification it cannot be said that there was any failure on the part of the petitioners in compliance of any obligation required under the statute before entering into the transactions in question and that there was no verification of the genuineness of the suppliers in question by the petitioner during the relevant period.”

Allowing relief to the petitioners, the Court quashed the impugned orders and directed the GST department to consider afresh theissue of their entitlement of benefit of input tax credit in question by considering the documents which the petitioners intend to rely on support of their claim of genuineness of the transactions in question and the respondent concerned shall also consider as to whether payments on purchase in question along with GST were actually paid or not to the suppliers (RTP) and also to consider as to whether the transactions and purchases were made before or after the cancellation of registration of the suppliers and also to consider as to the compliance of statutory obligation by the petitioners in verification of identity of the suppliers (RTP).

While concluding, the Court observed that “If 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 and after taking into consideration as to whether facts of the petitioners are similar to the judgements of the Supreme Court and various High Courts and of this Court upon which petitioners intend to rely and if it is found similar to the present case in that event the petitioners shall be given the benefit of input tax credit in question.”

To Read the full text of the Order CLICK HERE

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