Wrongful availment of GST ITC on Supplier whose GST Reg. Cancelled Void Ab-initio: Calcutta HC Remands Matter for Hearing [Read Order]

The Calcutta High decided to remand the matter due to lack of personal hearing in a case where the demand was issued on wrongful availment of Input Tax Credit ( ITC ) under GST ( Goods and ServicesTax) was as supplier’s GST registration was cancelled void ab initio.

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A show cause notice (SCN) dated 03.06.2022 was issued under Section 74 of the West Bengal Goods and Services Tax Act, 2017, against the petitioner Laxmidhan Stores alleging wrongful availment of input tax credit (ITC) during April 2018 to March 2019.

It was further alleged that the registration of the supplier who was non-existent had been cancelled ab initio from 25.10.2017 under Section 29(2)(a) of the said Act.

Even after receiving the reply to the SCN, no opportunity of personal hearing was given to the petitioner and the Adjudicating Authority demanded tax, interest and penalty by an order dated 27.03.2023.

On appeal, the Appellate Authority rejected the petitioner’s contentions and affirmed the previous order.

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The counsel for the petitioner submitted that the denial of an opportunity of personal hearing before the Adjudicating Authority has caused prejudice and cited several case laws to this effect including Chandni Crafts v. Union of India.

Justice Kausik Chanda was of the view that the procedure adopted was improper as personal hearing opportunity was provided for only in the appellate stage, which is in violation of proper adjudication in compliance with Section 75(4).

Thus, the court remanded the matter to the Adjudicating Authority for fresh consideration.

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