Facts of the Case:
In this case, the petitioner during FY 2017–18 purchased vehicles from suppliers after paying GST and Compensation CESS. The CESS paid on inward supplies was duly auto-populated in GSTR-2A under Section 38 of the CGST/WBGST Act, 2017. Although the petitioners collected CESS on outward supplies, they did not report this in their GSTR-3B returns under a bona fide belief that their accumulated unutilized CESS credit was more than sufficient to offset the CESS collected on outward supplies. Upon finalizing accounts, the petitioners realized the omission and disclosed the correct CESS liability in their annual return GSTR-9, thereby demonstrating that the earlier non-disclosure was entirely revenue neutral.
A show-cause notice under Section 74 was issued alleging non-payment of CESS. Since no reply was filed, a demand (tax + interest + penalty) was confirmed. In appeal, the petitioners contended that there was no suppression or fraud and that the admitted CESS mismatch stood reconciled in the annual return and ought to be offset against available unclaimed ITC. The appellate authority accepted that Section 74 was wrongly invoked and converted the case to Section 73 but, while reducing penalty, refused to consider the GSTR-9 disclosure and ignored the petitioners’ unavailed CESS ITC. Aggrieved thereby, the petitioners filed the present writ petition.
Issue:
Whether the appellate authority was justified in ignoring the petitioners’ GSTR-9 disclosure and the unavailed ITC of Compensation CESS — particularly when the return was filed before the insertion of the mandatory prohibition under Section 44(2) (post-Finance Act 2023) — and whether such an approach violates Article 265 of the Constitution by imposing tax without proper authority of law.
Held that:
The Calcutta High Court held that the appellate authority committed a serious error in disregarding the petitioners’ GSTR-9 return and their claim of unavailed CESS ITC, even after accepting that the case did not fall under Section 74 and involved no willful suppression or fraud. The Court emphasized that Article 265 mandates that no tax can be levied or collected except by authority of law, and therefore any demand raised without giving credit for available ITC on inward supplies, especially when the omission was corrected in GSTR-9 would offend the constitutional mandate.
On the argument that GSTR-9 was filed beyond the time prescribed in Section 44(2), the Court clarified that the mandatory bar on filing annual returns beyond the prescribed date was introduced only through the Finance Act, 2023, with effect from 1 October 2023. Since the petitioners had filed GSTR-9 on 28 August 2023, i.e., prior to the commencement of the amended Section 44(2), the statutory bar was inapplicable. The earlier version of Section 44(2) merely indicated the due date but did not impose any negative prohibition or penal consequence for belated filing, and in fact, the statutory provision for late fees under Section 47 shows that delayed filing was contemplated and not barred.
Accordingly, the High Court set aside the appellate order dated 6 February 2025 and remanded the matter to the appellate authority to reconsider the appeal afresh, directing that due consideration must be given to the effect of GSTR-9, the petitioners’ accumulated unavailed CESS ITC, and their subsequent payment of differential liability.
Case Name: Bidyut Autotech Private Limited and another Versus The Assistant Commissioner of State Tax, Bureau of Investigation, South Bengal (HQ) and others. dated 26.11.2025
To read the complete judgement 2025 Taxo.online 3154
