M/S Jyoti Tar Products Private Limited And Anr. vs. The Deputy Commissioner State Tax Shibpur Charge And Ors

Held

The Court held that an alternative statutory remedy by way of appeal is available to the petitioners. Citing the Supreme Court's decision in Assistant Commissioner (CT) LTU, Kakinada & ors. Vs. M/s. Glaxo Smith Kline Consumer Healthcare Limited, the Court observed that writ petitions should generally not be entertained when a statutory alternative remedy exists and has not been availed within the prescribed period. Therefore, the Court decided not to entertain the writ petition on merits. The petitioners were directed to prefer an appeal before the proper forum. No specific finding was made on the merits of the ITC denial or the petitioners' due diligence claims, as the petition was disposed of on the ground of alternative remedy.

Facts

The petitioners, M/s. Jyoti Tar Products Private Limited & Anr., are challenging an order passed by the Deputy Commissioner, State Tax, Shibpur Charge, in FORM DRC-07 dated 10.07.2024. This order, passed under section 74 of the Central Goods and Services Act, 2017 and the West Bengal Goods and Services Tax Act, 2017 for the financial year 2018-19, denied input tax credit (ITC) on invoices from various registered persons. The denial was based on the assertion that the inward supplies were declared, and ITC was availed from a supplier who was unregistered, non-existent, or not conducting business from the registered place. The petitioners contend they conducted due diligence, verified the suppliers' genuineness and existence, made payments through banking channels, and possessed valid tax invoices, with physical movement of goods confirmed.

Key Issues

1. Whether the denial of input tax credit (ITC) on invoices issued by registered persons, on the grounds that the suppliers were allegedly unregistered, non-existent, or not conducting business from their registered premises, is valid, particularly when the petitioners claim to have exercised due diligence, confirmed physical movement of goods, made payments through banking channels, and possessed valid tax invoices? (Question of law and fact, turning on Section 74 of the CGST Act, 2017 and the WB GST Act, 2017). Petitioner's contention: The petitioners argue that their transactions were valid, they exercised due diligence in verifying suppliers, and that the retrospective cancellation of suppliers' registration should not invalidate their ITC claims. They rely on the fact that goods moved physically, payments were made via banking channels, and they held tax invoices. State's contention: The State argues that an alternative remedy by way of appeal is available to the petitioners before the appellate authority, and therefore, the writ petition should not be entertained by the High Court.