Order Date – 02 August 2023

Parties: Suncraft Energy Private Limited and Another Vs The Assistant Commissioner, State Tax, Ballygunge Charge and Others

 Facts – 

• The Petitioner, Suncraft Energy Private Limited had received supply of goods/services from a supplier (fourth respondent) and had paid the tax to the supplier. However, certain discrepancies in invoices resulted in the input tax credit not reflected in GSTR 2A. 
• The first respondent-initiated recovery proceedings against the appellant. The petitoner submitted returns and the department found some  discrepancies. The appellant had submitted their reply dated 24.08.2022. 
• Thereafter the appellant was served with the show-cause notice dated 06.12.2022 proposing a demand as to the excess ITC claimed by the appellant for the Financial Year 2017-18 on the basis of the difference of the amount of ITC in Form GSTR-2A and Form GSTR-3B 

Issue – 

• Whether the first respondent was justified in directing the appellant to reverse the input tax credit without conducting any enquiry on the supplier?

 Order – 

• The Divisional Bench of Hon’ble High Court observed that the show cause notice does not allege that the appellant was not in possession of a tax invoice issued by the supplier registered under the Act. There is no denial of the fact that the appellant has received the goods or services or both.
• In the reply submitted by the appellant to the said show cause notice the appellant had clearly stated that they are in possession of the tax invoice, they had received the goods and services or both and the payment has been made to the supplier of the goods or services or both.
• The first respondent without resorting to any action against the fourth respondent who is the selling dealer has ignored the tax invoices produced by the appellant as well as the bank statement to substantiate that they have paid the price for the goods and services rendered as well as the tax payable there on, the action of the first respondent has to be branded as arbitrarily.
• Therefore, before directing the appellant to reverse the input tax credit and remit the same to the government, the first respondent ought to have taken action against the fourth respondent the selling dealer and unless and until the first respondent is able to bring out the exceptional case where there has been collusion between the appellant and the fourth respondent or where the fourth respondent is missing or the fourth respondent has closed down its business or the fourth respondent does not have any assets and such other contingencies, straight away the first respondent was not justified in directing the appellant to reverse the input tax credit availed by them.
• Therefore, the demand raised on the appellant dated 20.02.2023 is not sustainable.