Merely Agents and Not Suppliers: Calcutta HC Quashes GST Appellate Order for Non-Application of Mind [Read Order]
The High Court set aside a two-page, Unreasoned GST appellate order under section 107 of WBGST Act, 2017 and Remanded appeal for Fresh Consideration.
The Calcutta High Court quashed a Goods and Services Tax (GST) Appellate Order noting that the petitioners, against whom the order was passed were merely agents of the supplier and not the suppliers themselves, and thus not liable to pay GST.
The Court found that the appellate authority failed to apply its mind and merely rubber-stamped the adjudication order without examining the documents or addressing the petitioners' core issue.
The Petitioner, Indrani Dhar & Anr., challenged an order dated June 26, 2025 passed by the appellate authority under Section 107 of the West Bengal Goods and Services Tax Act (WBGST), 2017 whereby, the petitioner’s appeal against an adjudication order dated May 22, 2024, issued under Section 74(9) of the same Act was dismissed.
Section 107 of the West Bengal Goods and Services Tax Act (WBGST), 2017 provides as follows: Appeals to Appellate Authority.
“Any person aggrieved by any decision or order passed under this Act or the Central Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person.”
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On the other hand, dismissal of appeal against an adjudication order under section 74(9) explained that: Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of facts.
“The proper officer shall, after considering the representation, if any, made by the person chargeable with tax, determine the amount of tax, interest and penalty due from such person and issue an order.”
The Counsel for the Petitioner, Anup Dasgupta and B. Sengupta, argued that they were merely agents and not suppliers, and that no tax liability could be imposed upon them. They relied on the circular bearing No.57/31/2018-GST dated September 4, 2018 issued by the Central Board of Indirect Taxes and Customs to support their submission.
Further, they argued that despite submitting crucial documents, including a letter dated February 24, 2021, to the Assistant Commissioner of State Tax, the adjudicating authority proceeded to pass the adjudication order imposing tax on the petitioners, which the petitioners were never liable to pay.
On the other hand, the State Counsel Tanoy Chakraborty, N. Chatterjee and Saptak Sanyal, argued that these documents were not uploaded on the relevant GST Authorities portal, to which, the Petitioner’s counsel maintained that their documents have been subsequently resubmitted and thus, be taken into consideration.
The Bench comprising Justice Om Narayan Rai observed that the two-page appellate order provided no substantive reasons for its conclusion, merely noting the case history, facts, and grounds of appeal before summarily confirming the adjudicating authority's decision.
Further, the High Court emphasized that section 74(12) of the WBGST Act of 2017, mandates that reasons must be provided to support the ultimate decision, which serve as the "live link between the narrative and the directive," and their absence can render an order a nullity.
Justice Rai noted that the appellate authority had failed to apply its mind and had simply "dittoed" the adjudicating authority's order without considering the petitioners' detailed grounds of appeal, the High Court concluded that the impugned order was wholly unreasoned and unsustainable under Article 226 of the Constitution of India.
Consequently, the High Court set aside the order dated June 26, 2025 and the matter was remanded to the appellate authority for fresh consideration of the appeal, in accordance with law. The court clarified that it had not gone into the merits of the case and left all points open for the appellate authority to decide afresh. Thus, the Writ Petition was disposed of without any order as to costs.
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