The Hon’ble High Court of Calcutta vide its order dated 05.05.2022 in the matter of Sanchita Kundu & Anr. Vs. The Assistant Commissioner of State Tax, Bureau of Investigation, South Bengal & Ors. in W.P.A. No. 7231 of 2022 with W.P.A. 7232 of 2022, held that the benefit of Input Tax Credit shall not be denied if the transactions are found to be genuine and made with the suppliers who were registered taxable persons and had a valid registration at the time of transactions.

The Petitioners preferred the present Writ Petition against the order dated 27th December, 2021, whereby the benefit of Input Tax Credit was denied to the Petitioner on the purchase of goods from suppliers on the ground that the registration of the suppliers has already been cancelled with retrospective effect.  Demand for penalty and interest from the Petitioner was also made through said order.  Further the orders dated 29.03.2022 & 30.03.2022 under Section 79(1)(c) of the WBGST, were also challenged in the present Writ Petition.

Petitioners’ Submissions:

  • That relying on the supporting relevant documents, it was submitted on the behalf of the Petitioners that the transactions in dispute are genuine and the same has been verified by them with due diligence.
  • The name of the suppliers as registered taxable person was available at the Government Portal and their registration was shown as valid and existing at the time of transaction. Therefore, the petitioners could not be faulted if the suppliers appear to be fake later on.
  • The amount of purchase and the required tax has been paid by the petitioner in cash and all transactions were through banks. Further, unless collusion between the petitioners/purchasers and suppliers is proved with concrete material by the respondents, the petitioners could not be penalised.
  • That all the purchases invoices-wise were available on GST portal in Form GSTR-2A.
  • Lastly, the Petitioners relied on the judgment of this court in M/s. LGW Industries Limited & Ors. Vs. Union of India & Ors. In W.P.A No.23512 of 2019 dated 13th December, 2021, wherein the similar issue was involved.


  • The Hon’ble Court after considering the submissions, the facts of the case and the relevant documents, found that without verification it cannot be said that there was any failure on the part of the Petitioners in compliance of any obligation required under the statute before entering into the transactions. Thus, remanded the matters back to the respondents concerned officer to verify whether payments on purchases in question were made along with GST or not, and also to consider as to whether the transactions were made before or after the cancellation of registration of the suppliers.
  • Further it was directed that if upon verification of relevant documents, it is found that transactions in question are genuine and the transactions were made before the cancellation of registration of those suppliers, and, if it is found that the facts of the case are similar to the judgments of Supreme Court and various High Court which the Petitioners intend to rely upon, the Petitioners shall be given the benefit of Input Tax Credit.

The Hon’ble Court with the above findings disposed of the Writ Petitions and set aside the impugned orders.

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