HC Remands ITC Reversal Case for Non-Compliance with Rules 42 and 43

Case Details: Hemraj Rice Mill vs. Assistant Commissioner, CGST & CX, Bardhaman - [2025] 175 taxmann.com 788 (Calcutta)

Judiciary and Counsel Details

• Raja Basu Chowdhury, J.
• Raharshi Chatterjee & Ms Suman Sahani for the Petitioner.
• Bhaskar Prosad Banerjee, Tapan Bhanja, Debasish Chowdhury & Prithu Dudharia for the Respondent.

Facts of the Case

The petitioner challenged the determination of input tax credit (ITC) reversal under Section 17 of the CGST Act and the West Bengal GST Act. A show cause notice was issued, pursuant to which the proper officer, after analysing return data, concluded that ITC had not been reversed. The petitioner contested the proceedings; however, the adjudicating authority proceeded to determine the ITC reversal without applying the computation formulae prescribed under Rule 42 and Rule 43 of the CGST Rules and the West Bengal GST Rules. On appeal, the Appellate Authority recorded that the adjudicating authority had bypassed the procedural requirements by directly computing the credit, but ultimately rejected the appeal, noting that the petitioner had neither claimed common credit nor submitted the requisite reconciliation statement. The matter was accordingly placed before the Calcutta High Court.

High Court Held

The Calcutta High Court held that the Appellate Authority, having found that the adjudicating authority failed to comply with the mandatory procedure under Rule 42 and Rule 43, ought to have called upon the petitioner to produce the reconciliation statement to enable a lawful and accurate determination. It was observed that both the procedural violation by the adjudicating authority and the petitioner’s failure to furnish necessary documentation contributed to the flawed outcome. Consequently, instead of remanding the matter to the Appellate Authority, the Court remanded it to the adjudicating authority for a fresh decision in accordance with law.