9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (5) TMI 138 - HC - GSTChallenged the order passed beyond the statutory period under Section 73 of the West Bengal/Central Goods and Services Tax Act 2017 - invoking powers under Section 168A - reversal of input tax credit - retrospective cancellation of registration of three suppliers of the petitioner - force majeure - HELD THAT - In the instant case however the respondents by invoking the powers under Section 168A of the said Act through two several notifications dated 31st March 2023 and 28th December 2023 had extended the date of passing of the order under Section 73(9) of the said Act in respect of the financial year 2019-20 up to 31st day of August 2024. According to she there was no force majeure condition prevailing by invoking the aforesaid provision and extending the period and on such ground not only the order passed under Section 73(9) of the said Act is unsustainable the above notifications dated 31st March 2023 and 28th December 2023 are also bad and cannot be sustained. On a show cause being issued the petitioner had duly responded to the same and had categorically stated that the purchases made with the suppliers whose registration had been cancelled retrospectively had been done in regular course of business and in good faith. To substantiate the same not only invoices of the above suppliers but ledgers and eway bills for the relevant period in respect of the aforesaid three suppliers were also disclosed. By placing reliance on the order passed under Section 73(9) of the said Act she would submit that although the proper officer had accepted the explanation given by the petitioner in respect of two suppliers however in respect of one particular supplier namely Shree Shyam Iron Steel Trading Company without assigning any reason the reversal of input tax credit was upheld. This according to her is a failure to exercise jurisdiction. Thus she would submit that the order passed by the proper officer is not sustainable and should be set aside and pending hearing of this writ petition the same should be stayed. Having regard thereto let this matter stand adjourned and be taken up for further consideration on 28th April 2025. Until further order the impugned order shall remain stayed till the next date.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this matter are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of the order passed beyond the statutory period under Section 73(10) of the said Act Relevant legal framework and precedents: Section 73(10) of the West Bengal/Central Goods and Services Tax Act, 2017 prescribes a limitation period within which the tax authorities must pass an order for recovery of tax not paid or short paid. The limitation period is generally one year from the date of filing of the annual return, subject to extensions granted by the Government under statutory provisions. Court's interpretation and reasoning: The Court examined the timeline of the notifications issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, which extended the time limit for furnishing annual returns for the financial year 2019-20 initially till 28th February, 2021, and subsequently till 31st March, 2021. The petitioner contended that these extensions also governed the time limit for passing orders under Section 73(9) of the said Act. However, the authorities subsequently issued two notifications dated 31st March, 2023 and 28th December, 2023 invoking Section 168A of the said Act, which further extended the time limit for passing orders under Section 73(9) up to 31st August, 2024. The petitioner challenged these later extensions on the ground that no force majeure condition existed to justify such extensions. Key evidence and findings: The Court noted the sequence of statutory notifications and the absence of any explicit force majeure justification in the later notifications extending the limitation period. Application of law to facts: The Court recognized that Section 168A empowers the Government to extend limitation periods in exceptional circumstances, typically involving force majeure or extraordinary conditions. The petitioner argued that no such conditions prevailed during the extended period, rendering the notifications invalid. Treatment of competing arguments: While the petitioner challenged the validity of the extended limitation period, the Court did not make a final determination on this issue at this stage but recorded the submissions and adjourned the matter for further consideration. Conclusions: The Court took cognizance of the petitioner's challenge to the validity of the extended limitation notifications but deferred any conclusive ruling pending further hearing. Issue 2: Legality of reversal of input tax credit on account of retrospective cancellation of suppliers' registrations Relevant legal framework and precedents: Under the GST regime, input tax credit is admissible only if the supplier is duly registered and the transaction is genuine. Retrospective cancellation of a supplier's registration can trigger reversal of ITC claimed by the recipient. Section 73(9) of the said Act provides the mechanism for recovery of tax along with interest and penalty in cases of erroneous ITC claims. Court's interpretation and reasoning: The petitioner submitted that the purchases from the three suppliers, whose registrations were retrospectively cancelled, were made in the regular course of business and in good faith. To support this, the petitioner produced invoices, ledgers, and e-way bills for the relevant period. The tax authority accepted the petitioner's explanation and allowed ITC in respect of two suppliers but disallowed ITC related to one supplier, Shree Shyam Iron Steel Trading Company, without assigning any reasons. Key evidence and findings: The petitioner's documentary evidence included invoices, ledger accounts, and e-way bills demonstrating bona fide transactions. The tax authority's order acknowledged the petitioner's explanation for two suppliers but failed to provide any rationale for disallowing ITC with respect to the third supplier. Application of law to facts: The Court emphasized that the exercise of jurisdiction by the tax authority must be reasoned and fair. The failure to assign reasons for disallowing ITC on one supplier, while allowing it on others under similar circumstances, amounted to a failure to exercise jurisdiction properly. Treatment of competing arguments: The State respondents sought time to take instructions regarding the disallowance of ITC for the third supplier, indicating that the matter required further examination. Conclusions: The Court observed that the impugned order's selective disallowance without reasons was unsustainable and warranted further consideration. 3. SIGNIFICANT HOLDINGS The Court preserved the following crucial legal reasoning verbatim: "Although the proper officer had accepted the explanation given by the petitioner in respect of two suppliers, however, in respect of one particular supplier, namely, Shree Shyam Iron Steel Trading Company without assigning any reason the reversal of input tax credit was upheld. This according to her is a failure to exercise jurisdiction." Core principles established include:
Final determinations on each issue were reserved for further hearing
|
