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TMI Blog2024 (5) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... st 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. The orders passed in the writ petition is set aside and the order passed by the first respondent namely the Assistant Commissioner, State Tax, Bally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 73 (1) of the CGST Act, 2017/ WBGST Act, 2017 dated 22.8.2023 holding that the appellant had failed to produce any evidence from which it can be ascertained that the suppliers had paid tax to Government on those supplies (which are disclosed/ admitted by the suppliers in their statement in GSTR-I) and that the appellant had availed and utilized Input Tax Credit (IPC) in contravention of Section 16 (2)(c) of the Act. Therefore, it was proposed that ITC of Rs. 4,52,739.42/- (IGST) is found reversible along with interest, payable as per provisions of Section 50 of the GST Acts. Challenging the said show-cause notice the writ petition had been filed as stated above, which has been disposed of by the impugned order. 5. The adjudicating authority in the order dated 28.12.2023 has confirmed the demand made in the show-cause notice. We find from the said order certain findings recorded by the authority are outside the scope of the allegations in this show-cause notice. These findings are in page 6 of the adjudication order dated 28.12.2023 which pertained to the allegation that the appellant who claimed to have received manpower services only did not conclusively prove whether he act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sposed of by directing the petitioner therein to file a statutory appeal. Aggrieved by such order, the intra court appeal was preferred before this Court. The Court considered the scheme of the Act and held as follows: 3. For a dealer to be eligible to avail credit of any input tax, the conditions prescribed in Section 16 (2) of the Act have to be fulfilled. Sub-section (2) of Section 16 commences with a non-obstante clause stating that notwithstanding anything contained in Section 16 no registered person shall be entitled to credit of any input tax in respect of any supply of goods or services or both to him unless- (a) he is n possession of tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (b) he has received the goods or services or both; (c) subject to the provisions of Section 41 or Section 43A, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of such supply; and (d) he has furnished the return under Section 39. 5. In the press release dated 18.10.2018 a clarification was is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment or has been lawfully adjusted against output tax liability and correctly reflected in the return filed for the respective tax period, would not be eligible for claim of ITC. The question that arose for consideration was as to whether for the default committed by the selling dealer can the purchasing dealer be made to bear the consequences of the denying the ITC and whether it is the violation of Article 14 of the Constitution. After taking note of the language used in Section 9(2)(g) of the DVAT Act where the expression "dealer or class of dealers" occurring in Section 9(2)(g) of the DVAT Act should be interpreted as not including a purchasing dealer who has bona fide entered into purchase transaction with validly registered selling dealer who have issued tax invoices in accordance with Section 15 of the said Act where there is no mismatch of transactions in Annexures 2A and 2B and unless the expression "dealer or class of dealers" in Section 9(2)(g) is read down in the said manner, the entire provision would have to be held to be violative of Article 14 of the Constitution. It was further held that the result of such reading down would be that the depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant to reverse the input tax credit availed by them. Therefore, we are of the view that the demand raised on the appellant dated 20.02.2023 is not sustainable. 10. In the result, the appeal is allowed, the orders passed in the writ petition is set aside and the order dated 20.02.2023 passed by the first respondent namely the Assistant Commissioner, State Tax, Ballygaunge Charge, is set aside with a direction to the appropriate authorities to first proceed against the fourth respondent and only under exceptional MAT 1218 OF 2023 REPORTABLE circumstance as clarified in the press release issued by the Central Board of Indirect Taxes and Customs (CBIC), then and then only proceedings can be initiated against the appellant. With the above observations and directions the appeal is allowed. 7. Against the above judgment the State preferred an appeal before the Hon'ble Supreme Court which was dismissed as reported in (2023) 13 Centax 189 (SC). 8. The decision in Suncraft Energy Private Limited applies with full force to the case on hand. Admittedly, the adjudicating authority without resorting to any action against the supplier who is the selling dealer, had ignored the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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