Calcutta HC Rejects Writ Against Officer’s ITC Finding Made Within Jurisdiction | Notes Failure To Show Bank Proof And Points To Appeal Remedy
Safiya Malik
The High Court of Calcutta Single Bench of Justice Raja Basu Chowdhury has disposed of a writ petition challenging specific findings in a tax adjudication order under the GST framework. The court held that the petitioner, having approached the High Court under Article 226 of the Constitution of India, could not subsequently seek to reopen the same issues before the appellate authority. However, the court permitted the petitioner to raise any other maintainable grounds not presented in the writ petition before the appellate authority within four weeks, subject to compliance with legal requirements.
The matter concerned a challenge to an order dated 29 January 2025 issued under Section 74 of the West Bengal Goods and Services Tax/ Central Goods and Services Tax Act, 2017, for the tax period from July 2017 to March 2022. The order arose from an audit observation conducted under Section 65 of the Act, leading to proceedings initiated through a show cause notice dated 1 August 2024 in Form DRC-01.
The show cause notice proposed demands under multiple heads, including irregular availment of input tax credit (ITC) where suppliers had not filed GSTR-3B returns, ineligible ITC claims for motor vehicle-related expenses, ITC claimed in violation of Sections 16(1) and 16(2) of the CGST Act, excess ITC claimed in GSTR-3B compared to GSTR-2A, non-payment of GST on supplies from unregistered suppliers and on services under reverse charge mechanism (RCM), discrepancies between GSTR-9 and Profit & Loss accounts, and general penalties under Section 125 of the CGST Act.
The petitioner confined its challenge to four specific heads: paragraph 2.2 (invoices related to motor vehicles), paragraph 2.3 (ineligible ITC), paragraph 2.4 (excess ITC in GSTR-3B over GSTR-2A), and paragraph 2.8 (ITC reversal for non-payment to sundry creditors within 180 days). The petitioner contended that in relation to paragraph 2.8, the authorities had wrongly treated amounts shown against sundry creditors in financial statements as outstanding beyond 180 days, thereby triggering the second proviso to Section 16(2) of the CGST Act, without basis. Except for one creditor, payments had allegedly been made within the prescribed time frame.
The petitioner argued that despite clarifying this during the audit and again in response to the show cause notice, the adjudicating authority disregarded its explanation on the ground that bank statements had not been furnished. It was submitted that the respondents could have called for such documents during the audit and their omission could not be attributed to the petitioner.
On the ITC-related issues under paragraphs 2.2, 2.3, and 2.4, the petitioner submitted that it had no control over the generation of statements in GSTR-2A and GSTR-2B and that it had claimed credit only for purchases concerning it. These clarifications were allegedly not duly considered, and the adjudication order was said to involve a jurisdictional error justifying writ intervention under Article 226 despite an available appellate remedy under Section 107 of the GST Act.
The respondents opposed the petition, reserving their right to challenge its maintainability on the ground of alternative remedy but also addressing the merits. They submitted that the petitioner failed to provide bank statements proving payment to sundry creditors within 180 days and that the burden to produce such evidence rested on the petitioner. They also pointed out the absence of supporting documents for the ITC claims. It was argued that no irregularity had occurred in the adjudication and that the issues fell within the competence of the proper officer.
Justice Raja Basu Chowdhury recorded that the petitioner was primarily aggrieved by the failure of the authorities to consider its claim that payments to sundry creditors were made within the statutory 180-day period. The court noted that the petitioner had disclosed a chart to this effect, except for one creditor, but the adjudicating authority found that the petitioner had not substantiated this with bank statements.
The court stated: "if during the audit the respondents had failed to notice such documents, it was the obligation and the onus of the petitioner to place such documents before the authorities. The same has not been done." It was also observed that there was nothing on record even at the writ stage to prove the payments were made within the prescribed period.
On the ITC issues, the court found that the adjudicating authority had considered them and concluded that in the absence of supporting documents, no relief could be granted. Justice Chowdhury recorded: "ordinarily a challenge to an appealable order is not entertained under Article 226 of the Constitution of India. Though, violation of principles of natural justice, and a challenge on jurisdictional issue can be maintained, such issue must, in my view, relate to an exercise of jurisdiction by an authority which it does not have, and not merely an error committed within its jurisdiction."
The court distinguished the Supreme Court judgment in Raza Textiles Ltd. v. Income Tax Officer, Rampur, noting that the observations in that case were made in a different factual context and did not assist the petitioner.
The High Court concluded that the petition was not maintainable insofar as it sought to challenge alleged errors within the jurisdiction of the adjudicating authority. It held that the petitioner could not approach the High Court under Article 226, take a chance, and then reopen the same issues before the appellate authority. The judgment stated: "No further statutory challenge thereto, is maintainable as the petitioner cannot be permitted to have a second round before the appellate authority, so as to reopen the issues raised herein once again."
However, the court allowed that if the petitioner wished to raise any challenge not presented in the writ petition, and if such grounds were otherwise maintainable in law, these could be raised before the appellate authority within four weeks. The court directed that the appellate authority, in such circumstances, should hear and dispose of the appeal expeditiously, subject to compliance with other formalities.
The writ petition was disposed of with these observations and directions. The court also directed that urgent photostat certified copies of the order be supplied to the parties if applied for.
Advocates Representing the Parties:
For the Petitioners: Mr. Vinay Kr. Shraff, Ms. Priya Sarah Paul, Ms. Dev Kr. Agarwal, Ms. S. Poddar, Ms. Ankita Biswas
For the Respondents: Mr. Vipul Kundalia, Mr. K. K. Maiti, Mr. D. Chowdhuri
Case Title: Tara Lohia Private Limited v. Additional Commissioner, CGST & CX, Kolkata South Commissionerate & Anr.
Neutral Citation: 2025: CHC-AS:1379
Case Number: WPA 9655 of 2025
Bench: Justice Raja Basu Chowdhury
