Onus to Prove Sundry Creditor Payments Within 180 Days Before GST Authorities Lies with Company, Even If Not Requested: Calcutta HC [Read Order]

Tara Lohia Private Limited, the petitioner, filed a writ petition challenging an order passed under Section 74 of the WBGST/CGST Act, 2017, for the tax period July 2017 to March 2022. The show cause notice was issued on 1 August 2024 after an audit under Section 65, which contained several allegations.

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The petitioner’s counsel, Vinay Kr. Shraff argued that the GST department had wrongly treated the balances shown against sundry creditors in the company’s accounts as amounts outstanding beyond 180 days without any factual basis. The counsel pointed out that except for one supplier, Unique Safety, all payments had been made within the prescribed time.

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They further argued that the department ignored clarifications and failed to call for bank statements or vouchers during the audit. The counsel argued that the officer’s failure to properly deal with these aspects amounted to an error of jurisdiction, making the writ petition maintainable despite the availability of an appeal under Section 107 of theCGST Act.

The department’s counsel argued that the petitioner had not provided bank statements to prove payments to sundry creditors within 180 days, and that the burden of producing such documents lay on the petitioner. The counsel pointed out that the petitioner also failed to furnish supporting evidence for the ITC claims and that the proper officer acted within his jurisdiction in adjudicating the matter.

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The bench comprising Justice Raja Basu Chowdhury observed the petitioner’s claim and explained that even if the auditors did not request these documents during the audit, it was the petitioner’s obligation to produce them. The court found that the issues had been considered by the proper officer, who declined ITC relief in the absence of proper supporting documents.

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The court observed that challenges to appealable orders are ordinarily not entertained under Article 226 unless there is a violation of natural justice or a lack of jurisdiction, and that the present case involved alleged errors made within jurisdiction. The authority clearly had jurisdiction over the matter, so the court found no reason to interfere.

The court disposed of the writ petition without disturbing the adjudication order and held that no further statutory challenge could be made on the same issues before the appellate authority. But, it allowed the petitioner to raise any other grounds not covered in the writ in a statutory appeal within four weeks, to be decided by the appellate authority in accordance with law.

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