Calcutta HC: Authority Can’t Be Refused GST ITC Due to GSTIN Cancellation

Input Tax Credit (ITC) cannot be denied owing to the cancellation of the GST Registration with retrospective effect, according to a decision by a division of the Calcutta High Court (HC).

The respondents in the writ petition are LGW Industries Limited & Ors. Although the respondents/writ petitioners had requested a broader relief in the writ petition, primarily for the issuance of a writ of declaration to declare Section 16(2)(c) of the CGST Act/WBGST Act as unconstitutional, the intra-court appeal is against a common judgment and order passed by the Single Judge.

The Prayer comprises, in the event, the Court carries the provision to be constitutional to read the way the provision by holding that GST ITC shall be refused merely where the purchasers are confirmed to be collusive and in the nature of the sham transaction.

The government attorney for the appellant will argue that the writ petition itself was premature and that other writ petitions were still ongoing before the Single Judge where the constitutional legality of the clause as mentioned above, Section 16(2)(c) of the CGST Act/WBGST Act, was contested. The Government Counsel contends that the State has chosen to pursue these appeals for the reasons above.

The attorney for the respondents/writ petitioners claimed that the factual circumstances of the cases and writ petitions that were resolved by the contested decision were the reason the other writ petitions were separated and kept pending.

The Attorney further argued that the selling dealers’ registration had been revoked with retrospective effect as the only cause for rejecting the input tax credit.

Read Also: What to do If GST Registration is Cancelled via Suo Moto?

However, the Single Judge did not give the greater remedy requested by the writ petitioners, primarily a writ of declaration.

The writ petitioners are not challenging the aforementioned finding on appeal. Justices Supratim Bhattacharya and T.S. Sivagnanam, sitting on a division bench, noted that the court mentioned that in these cases, our opinion is that the guidance given via the Single Judge was not merely in the interest of the respondents/writ applicant however the same would protect the interest of the revenue.

With confidence, we opined as the case has been sent back to the appellant authority to enable verification of documents, and correspondences exchanged between the Department and the respondents/writ petitioner which have been related to a memo.