Judgment
15.09.2026
Item No.05 Ct. No. 10 BR WPA 18141 of 2026 Termico Engineers & Erectors Pvt. Ltd.
-vs- Deputy Commissioner of Revenue, State Tax, Baharampur Charge & Ors.
Mr. Sandip Choraria, Mr. Akash Chakraborty, Mr. Gunja Verma …. For the petitioner
Ms. Manasi Mukherjee, Mr. Prithu Dudhoria, Mr. Chandrachur Lahiri, Mr. Nikunj Berlia … for the State
1.
Affidavit of service filed by the petitioner be kept on record.
2.
Mr. Prithu Dudhoria and Mrs. Manasi Mukherjee is also engaged in this matter to assist the learned Government Pleader, Mr. Nikunj Berlia. Accordingly, their appearance is to be regularized from the Office of the learned Government Pleader.
3.
In the present writ petition, the petitioner has challenged the issuance of the show cause notice dated 22.5.2026 for cancellation of registration, wherein the registration stood suspended with effect from 1.4.1993.
4.
It is submitted that the petitioner herein is engaged in the business of executing works contract rendering services of assembly and erection of pre- fabricated structures and construction work and is duly registered under the GST Act, 2017.
5.
It is further submitted that the petitioner executes works contract as a contractor as well as sub-contractor
2 for main contractors who are engaged in execution of Government Projects.
6.
In the present case one P.C.P. International Limited, being the contractor, has issued a letter of award for executing the works contract in terms and conditions mentioned in the letter dated 21.8.2021. The State respondents issued a notice under Section 151 read with Rule 56 sub-rule 18 of the CGST Rules, intimating thereby, the discrepancies in the return regarding GSTR 3B on account of mismatch of excess input tax credit of Rs. 8,04,31,198.54/- for the financial years 2023-2024, 2024-2025 and 2025-2026 being inadmissible under Section 16 sub-section 2(c) read with Section 41 of the CGST Act and WBGST Act, 2017.
7.
The petitioner in response to such notice issued by the State respondent, filed a detailed reply on 30.4.2026 and prayed for an adjournment. Subsequently, the authorized representative of the petitioner furnished relevant documents including the particulars of the suppliers to the authority concerned for proper adjudication of the issue involved herein. Thereafter, the State-respondents issued a show cause notice for cancellation of registration dated 22.5.2026 suspending the registration with effect from 1.4.2023 which is the subject matter of challenge in the present writ petition.
8.
It is submitted by the petitioner, despite sharing the particulars of all the suppliers, the respondent authorities have arbitrarily and illegally suspended the
3 registration of the petitioner, stalling the entire business and causing undue financial hardship. The action of the respondent authorities in suspending the registration thereby making the business activities in –operational, is de hors the mandate of the provision of the statute.
9.
The petitioner submits that the GST registration cannot be suspended prior to the verification and quantifying of the mismatch excess ITC. Such action of the state respondent in suspending the registration of the petitioner is bad, illegal and arbitrary and has passed in excess of jurisdiction is not sustainable in the eye of law and is liable to be set aside.
10.
The petitioner places reliance upon the following judgments which are as follows:
i)Suncraft Energy Pvt.Ltd and anr.-vs-Assistant Commissioner, State Tax, Ballygunge Charge and Ors, reported in (2023) 117 GSTR 78;
ii) D.Y.Beathel Enterprises, rep. by its Proprietor Y.
Godwin Prasad –vs- State Tax Officer (Data Cell ), (Investigation Wing), reported in 2021 SCC Online Mad 16922;
iii) M/s Shreyash Enterprises -vs- State of Uttar Pradesh and two others, in Writ TAX NO. -3348 OF 2026 before the High Court of Judicature at Allahabad 11.
By placing relying upon the Judgment in Suncraft Energy Pvt.Ltd and anr.(supra) para 8 and 9 which is reproduced below:- “8. The reason for denying the input tax credit is on the ground that the detail of the supplier is not
4 reflecting in GSTR 1 of the supplier. The appellant had pointed out that they are in possession of a valid tax invoice and payment details to the supplier have been substantiated by providing the tax invoice and the bank statement. The appellant also referred to the press release dated October 18, 2018. What we find is that the first respondent has not conducted any enquiry on the fourth respondent supplier more particularly when clarification has been issued where furnishing of outward details in form GSTR 1 by a corresponding supplier and the facility to view the same in form GSTR 2A by the recipient is in the nature of tax payer facilitation and does not impact the ability not the tax payers to avail input-tax credit on self assessment basis in consonance with the provisions of section 16 of the Act. Furthermore, it was clarified that there shall not be any automatic reversal of input tax credit from buyer on non-payment of tax by the seller recovery shall be made from the seller however, reversal of credit from the buyer shall also be an option available with the Revenue authorities to address the exceptional situations like missing dealer, closure of business by supplier or supplier not having adequate assets, etc.”
9.The first 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 deal 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, straightaway the first respondent was not justified in directing 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 February 20, 2023 is not sustainable.”
12.
Further reliance has been placed upon the Judgment in D.Y. Beathel Enterprises, rep. by its
5 Proprietor Y. Godwin Prasad (supra), para 11 and 12 which is reproduced below:
“11. It can be seen therefrom that the assessee must have received the goods and the tax charged in respect of its supply, must have been actually paid to the Government either in case or through utilization of input tax credit, admissible in respect of the said supply.
12. Therefore, if the tax had not reached the kitty of the Government , then the liability may have to be eventually borne by one party, either the seller of the buyer. In the case on hand, the respondent does not appear to have taken any recovery action against the seller/Charles and his wife Shanthi, on the present transactions.”
13.
By placing reliance upon the Judgment in M/s Shreyash Enterprises (supra), para 2 and 3 which is reproduced below:- “2. Submission is, there is a jurisdictional error in issuance of the notice dated 07.07.2025, proposing to cancel the petitioner‟s registration. To the extent the adjudication proceedings are still pending and no final conclusion has been drawn by the Adjudicating Authority that the petitioner had availed bogus ITC and further to the extent , there is no emand raised on that count , the recital in the show cause notice alleging utilization and passing on bogus ITC, is an unascertained fact. Therefore , it is premature to allege that the petitioner has „contravened‟ the provision of the Act within the meaning of the term under Section 29(2 ) (s) of the Act.
3. Confronted with the above situation, learned Standing Counsel fairly states that the jurisdictional error has crept in the proceedings.”
14.
The State respondents strenuously argued and submits that the petitioner letter dated 3.7.2026 being annexure P-5 at page 87 and an e-mail sent to the State respondents annexed at page 89, it appears that the petitioners have already accepted the jurisdiction of the State respondents and have categorically given an
6 undertaking to deposit the admitted amount of Rs.
1,54,00,575/- with effect from 22.5.2026 and also to abide the decision in respect of the balance disputed input tax credit, if any, for revocation of jurisdiction.
15.
After hearing the rival contentions of the parties and perusing the materials available on record, this Court finds that the petitioner has been able to make out a prima facie case warranting interference at this stage. This Court has already taken judicial notice of all the relevant documents including the GSTR annexed at page 94 of the present writ petition and is of the considered view that since the petitioners have brought to the notice of the respondent authorities the names of the suppliers, it is incumbent upon the respondent authorities in view of Section 76 sub-section 1 and 2 of the CGST Act 2017 which contemplates that even if the amount which is required to be paid to the Government, has not been paid by the assesse, the proper officer shall serve on the person liable to pay such amount a notice requiring him to show cause as to why the said amount, as specified in the said notice , should not be paid by him to the Government.
16.
In the light of the Division Bench judgment of this Court in Suncraft Energy Pvt.Ltd and anr.(supra) in para 9 and M/s. Shreyash Enterprises (supra), the writ petition is disposed of with the following grounds:
i) In view of the above, the show cause notice for cancellation of registration, which has been suspended
7 with effect from 1.4.2023 dated 22.5.2026 is hereby quashed and set aside in light of the judgment as mentioned herein above ii) The petitioner is directed to submit a comprehensive and detailed reply to the notice dated 10.4.2026 issued under Section 61 read
with Rule 99 of the CGST/WBGST Act, 2017, within a period of three weeks from date and the respondent no. 1 shall consider and dispose of the same in light of the judgments referred to herein above within a period of four weeks thereafter and shall pass a speaking and reasoned order upon affording an opportunity of personal hearing to the petitioner and communicate such decision within a period of a week thereafter.
17.
However, it is made clear that respondent no. 1 shall take independent decision without being influenced by the observations made herein above.
18.
With the above observations and directions, the writ petition is disposed of.
19.
Since the affidavits have not been filed, the allegations made in the writ petition shall be deemed to have been denied and admitted.
(Smita Das De, J.)