The writ petition filed before the Calcutta High Court assails the legality of proceedings seeking reversal of Input Tax Credit solely on the allegation that suppliers were subsequently found to be non-existent or had obtained GST registration using alleged fake documents.

The petition specifically challenges Section 16(2)(c) of the CGST Act and WBGST Act, contending that a purchasing dealer who has:

  • received goods,

  • paid consideration including GST through banking channels,

  • relied upon valid tax invoices,

  • verified supplier registration on the GST portal, and

  • reflected purchases in GSTR-2A,

cannot be penalised for the independent default or fraud of the supplier, absent any allegation of collusion or sham transaction.

Reliance is placed on authoritative precedents including:

  • State of Maharashtra v. Suresh Trading Company, holding that retrospective cancellation of supplier registration cannot affect a bona fide purchaser;

  • Arise India Limited v. Commissioner of Trade & Taxes, affirmed by dismissal of SLP by the Supreme Court, holding that ITC cannot be denied to a purchasing dealer for supplier’s tax default without proof of collusion;

  • Indian Steel Corporation v. Deputy Commissioner of Sales Tax, recognising that subsequent cancellation of registration alone cannot invalidate genuine transactions.

The petition asserts that Section 16(2)(c), as applied, imposes an impossible and disproportionate burden on bona fide purchasers, violates the principle of value-added taxation under GST, and unlawfully shifts the incidence of tax from the supplier to the recipient.


Link to download the order
https://mytaxexpert.co.in/uploads/1766386349_LGWW.P.13.12.2019.PDF