VAT ITC Disallowance: Calcutta HC directs WB Commercial Tax Board for Verification of Documents including Original Tax Invoice and Fresh Consideration of Issues [Read Order]

In a recent judgment, the Calcutta High Court directed a fresh adjudication of issues related to the disallowance of Input Tax Credit ( ITC ) under the West Bengal Value Added Tax Act (WB VAT). The Court observed inconsistencies in the treatment and verification of documents, particularly the original tax invoice and related records, thus ordered to verify the documents.

The petitioner, ALD Automotive Private Limited challenged an order by the West Bengal Taxation Tribunal dated June 26, 2024. The Tribunal had upheld the Fast Track Revisional Authority’s order from February 28, 2020, which in turn confirmed the best judgment assessment made by the assessing authority on June 29, 2012.

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The assessment in question had been conducted ex parte, following non-response from the petitioner to the statutory notices. Although partial relief was granted by the Fast Track Revisional Authority in 2020, the petitioner contended that it had submitted key documents such as the original tax invoice, payment register, and party ledger in response to the department’s verification report dated September 17, 2019.

However, while the Revisional Authority recorded the petitioner’s submissions regarding these documents, it paradoxically also concluded that the original invoice had not been produced.

The petitioner’s primary contention was the disallowance of a portion of its ITC claim due to alleged non-production of original tax invoices and supporting documents. However, the petitioner claimed that they had produced documents including the original invoice.

On the contrary, the tax authorities maintained that while some ITC was allowed based on available records, a huge amount remained unverified due to missing documentation. It contended that the petitioner did not produce the tax invoice.

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The High Court held that such a factual dispute warranted fresh verification. The Court also observed that the tribunal had failed to consider several issues raised by the petitioner, including objections on limitation and violations of natural justice, as well as whether the disputed documents had actually been filed.

The Division Bench of Chief Justice T.S. Sivagnanam and Justice Chaitali Chatterjee (Das) noted inconsistencies in the record regarding the production of documents. The court remanded the matter to the department.

The bench noted that “Since the matter involves verification of the documents, which the petitioner asserts to have produced along with its reply to the verification report, we are of the view that one more opportunity can be granted to the writ petitioner to go before the 4th respondent, which authority presently has jurisdiction viz., West Bengal Commercial Taxes Appellate and Revisional Board so that a factual verification can be done.”

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The Court directed the West Bengal Commercial Taxes Appellate and Revisional Board verification to re-examine the issues afresh, taking into account all submissions and documents, and to provide an opportunity for a personal hearing.

To Read the full text of the Order CLICK HERE

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