Action Against Supplier is Essential for Non-reflection of Invoices Before Seeking Reversal from Recipient | Calcutta HC

Case Details: Suncraft Energy (P.) Ltd. v. Assistant Commissioner, State Tax - [2023] 153 taxmann.com 81 (Calcutta)

Judiciary and Counsel Details

• • T. S. Sivagnanam & Hiranmay Bhattacharyya, JJ.
  • Ankit Kanodia, Ms Megha Agarwal & Jitesh Sah, Advs. for the Appellant.
  • Anirban Ray & Md. T.M. Siddiqui, S. Sanyal, Advs. for the Respondent.

Facts of the Case

In the present case, the department disallowed appellant’s input tax credit (ITC) after alleging non-reflection of supplier invoices in GSTR 2A for FY 2017-18. The appellant argued that it had made payment to supplier through valid tax invoice but the demand was confirmed. It file writ petition but the Court directed to file appeal before the Appellate Authority. Therefore, it filed intra Court appeal against the decision.

High Court Held

The Honorable High Court noted that Press Release dated 18-10-2018 clarifies GSTR-2A does not impact input tax credit of buyers. However, the reversal of credit from buyer shall also be an option available with the revenue authorities to address exceptional situations like missing dealer, closure of business by supplier or supplier not having adequate assets etc.

In the instant case, the appellant had already submitted invoices and showed that payments were made through bank to the suppliers. However, the department failed to inquire on supplier despite clarifications submitted by the appellant and directed appellant to reverse ITC.

The Court further noted that in such cases, action against supplier would be essential before seeking reversal from recipient. Therefore, it was held that the Revenue’s action was deemed to be arbitrary and the impugned order was liable to be set aside & demand raised on the appellant was not sustainable.