Lokenath Construction Private Limited Vs. Tax/Revenue Government Of West Bengal

The appeal and the writ petition were heard analogously and are disposed of by this common judgment and order. We have heard Mr. Arnab Chakraborty and Mr. Aniket Chaudhury, learned Advocates appearing for the appellant/petitioner, Mr. T.M. Siddique, learned A.G.P. assisted by Mr. Tanoy Chakraborty and Mr. Saptak Sanyal, learned Advocates appearing for the State in MAT 2459 of 2023, and Mr. Uday Shankar Bhattacharya and Mr. Tapan Bhanja, learned Advocates appearing for the CGST Authority. MAT No. 2459 of 2023 has been filed challenging the order dated 04.12.2023 in WPA 2544 of 2023. In the said writ petition, the appellant had challenged a show-cause notice dated 22nd August 2023 issued by the WBGST Authorities on the ground that the notice was issued without causing any verification from the supplier’s end and denying credit to the appellant. The learned Writ Court disposed of the writ petition by directing the appellant to file the objection to the show-cause notice, and the authority was directed to consider the same and take note of the judgment relied on by the appellant. The Court also directed that until the disposal of the objection, no coercive action shall be taken against the appellant. It is contended before us by the learned Advocate for the appellant that in the writ petition, the appellant had contended that the show-cause notice is without jurisdiction, particularly in light of the decision of this Court in Suncraft Energy Private Limited Versus Assistant Commissioner of State Tax. During the pendency of the appeal, the respondent authority adjudicated the show-cause notice and passed an order dated 28.12.2023, which was challenged in the writ petition in WPA 5222 of 2024, which has been tagged to be heard along with the appeal.

The respondent authority issued a notice under Section 73(1) of the CGST Act, 2017/WBGST Act, 2017 dated 22.8.2023, holding that the appellant had failed to produce any evidence from which it can be ascertained that the suppliers had paid tax to the Government on those supplies (which are disclosed/admitted by the suppliers in their statement in GSTR-I) and that the appellant had availed and utilized Input Tax Credit (ITC) in contravention of Section 16(2)(c) of the Act. Therefore, it was proposed that ITC of Rs. 4,52,739.42/- (IGST) is found reversible along with interest, payable as per provisions of Section 50 of the GST Acts. Challenging the said show-cause notice, the writ petition had been filed as stated above, which has been disposed of by the impugned order. The adjudicating authority, in the order dated 28.12.2023, confirmed the demand made in the show-cause notice. We find from the said order that certain findings recorded by the authority are outside the scope of the allegations in this show-cause notice. These findings are on page 6 of the adjudication order dated 28.12.2023, which pertained to the allegation that the appellant, who claimed to have received manpower services only, did not conclusively prove whether he actually availed the services or not and that the appellant had not produced documents like the register of workers, the names of workers against whom the invoices were raised, etc., from where it may be concluded that the actual service has been procured by the RPP for the furtherance of his business. As rightly pointed out by the learned Advocate for the appellant, these were never part of the allegations in the show-cause notice. The adjudicating authority has admitted that the appellant has produced two certificates issued by the Chartered Accountants declaring that the suppliers had discharged the liability in corresponding GSTR-3B for the relevant periods. The adjudicating authority proceeded to reject those certificates issued by the Chartered Accountants by observing that they do not match with the facts stated in the returns as available in the GST common portal. If there was any clarification required for the assessee, it would have been well open to the adjudicating authority to call upon the assessee to do so, and without such opportunity, the adjudicating authority unilaterally proceeded with the matter. The law and the subject were considered by the Court in the case of Suncraft Energy Private Limited.

In the said case, the assessee had impugned the order of the assessing officer who reversed the Input Tax Credit availed by the assessee under the provisions of the WBGST Act. The private respondent was the supplier who provided goods and services to the assessee, who had made the tax payment to the supplier at the time of purchase along with the supply of goods/services. However, some invoices from the supplier were not reflected in the assessee’s GSTR-2A for the Financial Year 2017-18. The assessing authority issued notices for the recovery of ITC, to which the assessee objected, arguing that without conducting any inquiry into the supplier, who was the private respondent in the proceedings, and without effecting any recovery from the supplier, the Assessing Officer was not justified in proceeding against the assessee. There were two show-cause notices issued, for which the assessee submitted replies. The notice was adjudicated, and the demand raised in the show-cause notice was affirmed. The order was challenged by filing a writ petition, which was disposed of by directing the petitioner to file a statutory appeal. Aggrieved by this order, the intra-court appeal was preferred before this Court.

The Court considered the scheme of the Act and held as follows: For a dealer to be eligible to avail credit of any input tax, the conditions prescribed in Section 16(2) of the Act must be fulfilled. Sub-section (2) of Section 16 begins with a non-obstante clause, stating that notwithstanding anything contained in Section 16, no registered person shall be entitled to credit of any input tax in respect of any supply of goods or services unless (a) they are in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax-paying documents as may be prescribed; (b) they have received the goods or services; (c) subject to the provisions of Section 41 or Section 43A, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of such supply; and (d) they have furnished the return under Section 39.

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Lokenath Construction Private Limited

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