Email Directing ITC Reversal Without Supplier’s Registration Cancellation Details to be Quashed: HC

Case Details: Car Chassis Carriers (P.) Ltd. v. Assistant Commissioner - [2023] 152 taxmann.com 368 (Calcutta)

Judiciary and Counsel Details

• • T.S. Sivagnanam & Hiranmay Bhattacharyya, JJ.
  • Vinay Shraff & Ms Priya Sarah Paul for the Appellant.
  • S. Mukherjee & D. Ghosh for the Respondent.

Facts of the Case

In the present case, the department sent email and directed the appellant to reverse the input tax credit (ITC) against the supply on the ground that it had purchased materials from a dealer whose registration had been cancelled.

It filed writ petition and contended that the cancellation of selling dealer’s registration would not automatically grant department authority to compel purchasing dealer to reverse ITC. The learned Single Bench declined to grant any interim order and it filed intra-Court appeal.

High Court Held

The Honorable High Court noted that the procedure adopted by the Authority while directing reversal of ITC without providing details of cancellation of selling dealer’s registration and thereafter compelling appellant to pay amount was in violation of principles of natural justice. Therefore, the Court held that the direction to reverse ITC by way of email was not sustainable. The Court also issued a direction to the Authority to remit the amount of ITC which was reversed by the appellant.