The Division Bench allowed the appeal and set aside the Adjudication Order dated 10 December 2020 and the Appellate Order dated 02 January 2025.The Court held that:The Adjudicating Authority confirmed a tax liability exceeding the amount specified in the Show Cause Notice, in violation of Section 75(7) of the West Bengal Goods and Services Tax Act, 2017. The provision imposes a jurisdictional ceiling and prohibits confirmation of an amount higher than that stated in the notice. The excess demand rendered the order ultra vires and unsustainable.The failure to grant a personal hearing despite a specific request violated Section 75(4) of the Act. The provision mandates that a personal hearing shall be granted where requested. The ex parte order passed without granting such hearing constituted a breach of principles of natural justice and was held to be a fatal infirmity.The cumulative effect of breach of Section 75(7), violation of Section 75(4), and initiation of parallel proceedings under Sections 73 and 74 rendered the assessment fundamentally flawed.The Court remanded the matter to the Adjudicating Authority for de novo adjudication from the stage of reply to the Show Cause Notice, directing grant of fresh personal hearing and strict compliance with Section 75(7).Cases Referred by Court:Kaveri Telecom Products Ltd. vs. Commissioner of Customs (2018)
Bengal Engineering vs State of West Bengal & Ors 08-12-2025
The Division Bench allowed the appeal and set aside the Adjudication Order dated 10 December 2020 and the Appellate Order dated 02 January 2025.The Court held that:The Adjudicating Authority confirmed a tax liability exceeding the amount specified in the Show Cause Notice, in violation of Section 75(7) of the West Bengal Goods and Services Tax Act, 2017. The provision imposes a jurisdictional ceiling and prohibits confirmation of an amount higher than that stated in the notice. The excess demand rendered the order ultra vires and unsustainable.The failure to grant a personal hearing despite a specific request violated Section 75(4) of the Act. The provision mandates that a personal hearing shall be granted where requested. The ex parte order passed without granting such hearing constituted a breach of principles of natural justice and was held to be a fatal infirmity.The cumulative effect of breach of Section 75(7), violation of Section 75(4), and initiation of parallel proceedings under Sections 73 and 74 rendered the assessment fundamentally flawed.The Court remanded the matter to the Adjudicating Authority for de novo adjudication from the stage of reply to the Show Cause Notice, directing grant of fresh personal hearing and strict compliance with Section 75(7).Cases Referred by Court:Kaveri Telecom Products Ltd. vs. Commissioner of Customs (2018)
Background. On an application by UCO Bank under Section 7 of the Insolvency and Bankruptcy Code, 2016, CIRP was initiated against the first petitioner and admitted by the NCLT, Kolkata Bench on 07.03.2019. The process failed to produce a viable resolution plan and the company was admitted into liquidation on 05.03.2020. In liquidation it was sold as a going concern, the sale being confirmed by the NCLT on 11.12.2023 with waivers extinguishing claims arising prior to the initiation of CIRP which had not been lodged. An order in original dated 31.08.2024 under Section 73 nonetheless raised a demand of Rs. 4,28,33,922 with interest and penalty for FY 2019-20. The challenge to Notification No. 56 of 2023-Central Tax was not pressed.Observations of the Court. Following its own decision in Kashvi Power Steel P. Ltd., and having regard to the waterfall in Section 53 of the Code under which operational creditors falling within the residual category of remaining debts and dues cannot claim priority over the preceding categories, the Court found no reason to take a divergent view.It observed that promotion of corporate revival is the avowed object of the Insolvency and Bankruptcy Code, 2016, and that a buyer of a corporate debtor as a going concern should, in cases such as the one at hand, not be saddled with past dues. The proceeding for FY 2019-20 initiated by the CGST authorities, which culminated in the impugned order, could not have been initiated at all.Final verdict. The order in original dated 31.08.2024 was quashed and the writ petition was disposed of.
Rabirun Vinimay Pvt. Ltd. & Anr. v. Union of India & Ors. 12-11-2025
Background. On an application by UCO Bank under Section 7 of the Insolvency and Bankruptcy Code, 2016, CIRP was initiated against the first petitioner and admitted by the NCLT, Kolkata Bench on 07.03.2019. The process failed to produce a viable resolution plan and the company was admitted into liquidation on 05.03.2020. In liquidation it was sold as a going concern, the sale being confirmed by the NCLT on 11.12.2023 with waivers extinguishing claims arising prior to the initiation of CIRP which had not been lodged. An order in original dated 31.08.2024 under Section 73 nonetheless raised a demand of Rs. 4,28,33,922 with interest and penalty for FY 2019-20. The challenge to Notification No. 56 of 2023-Central Tax was not pressed.Observations of the Court. Following its own decision in Kashvi Power Steel P. Ltd., and having regard to the waterfall in Section 53 of the Code under which operational creditors falling within the residual category of remaining debts and dues cannot claim priority over the preceding categories, the Court found no reason to take a divergent view.It observed that promotion of corporate revival is the avowed object of the Insolvency and Bankruptcy Code, 2016, and that a buyer of a corporate debtor as a going concern should, in cases such as the one at hand, not be saddled with past dues. The proceeding for FY 2019-20 initiated by the CGST authorities, which culminated in the impugned order, could not have been initiated at all.Final verdict. The order in original dated 31.08.2024 was quashed and the writ petition was disposed of.
Facts:The petitioner challenged an appellate order dated 15.05.2025 passed under Section 107 dismissing the appeal against an adjudication order under Section 74 dated 07.01.2025. The appeal was filed on 26.04.2025, beyond three months but within the condonable period of one month under Section 107(4). The appellate authority rejected the appeal on the grounds of delay and non-payment of pre-deposit though the adjudication order determined only interest and penalty and no tax demand.Court Decision:The Court held that under Section 107(6) as it stood at the time of filing the appeal, pre-deposit was required only in respect of the amount of tax in dispute. Since the impugned order involved only penalty and interest and there was no tax demand, there was no statutory requirement of pre-deposit. The Court observed that the proviso mandating pre-deposit even for penalty-only orders was inserted by the Finance Act, 2025 with effect from 01.10.2025 and was not applicable to the present case.The Court found that the appellate authority erred in rejecting the appeal for non-payment of pre-deposit. The matter was remanded to the Appellate Authority to consider the petitioner’s application for condonation of delay. If the delay is condoned, the appellate authority shall hear the appeal on merits without insisting on pre-deposit.
Barjinder Singh Kohli vs The Assistant Commissioner of Revenue & Ors. 03-11-2025
Facts:The petitioner challenged an appellate order dated 15.05.2025 passed under Section 107 dismissing the appeal against an adjudication order under Section 74 dated 07.01.2025. The appeal was filed on 26.04.2025, beyond three months but within the condonable period of one month under Section 107(4). The appellate authority rejected the appeal on the grounds of delay and non-payment of pre-deposit though the adjudication order determined only interest and penalty and no tax demand.Court Decision:The Court held that under Section 107(6) as it stood at the time of filing the appeal, pre-deposit was required only in respect of the amount of tax in dispute. Since the impugned order involved only penalty and interest and there was no tax demand, there was no statutory requirement of pre-deposit. The Court observed that the proviso mandating pre-deposit even for penalty-only orders was inserted by the Finance Act, 2025 with effect from 01.10.2025 and was not applicable to the present case.The Court found that the appellate authority erred in rejecting the appeal for non-payment of pre-deposit. The matter was remanded to the Appellate Authority to consider the petitioner’s application for condonation of delay. If the delay is condoned, the appellate authority shall hear the appeal on merits without insisting on pre-deposit.
Facts The appellant availed Input Tax Credit on purchases made from a supplier and paid the tax amount along with the value of goods/services. The department issued notices alleging mismatch between GSTR-2A and GSTR-3B and non-reflection of supplier invoices in GSTR-1. A demand order under Section 73(10) was passed reversing ITC along with interest and penalty. The writ petition was disposed of directing the appellant to file a statutory appeal, which led to the present intra-court appeal. Court Decision:The High Court set aside the demand order and held that reversal of ITC was not justified without first taking action against the selling dealer. The Court held that when the purchasing dealer has fulfilled conditions under Section 16(2), including possession of invoice, receipt of goods/services, and payment of tax, ITC cannot be denied merely due to non-reflection in GSTR forms. It was further held that proceedings against the purchaser can arise only in exceptional circumstances such as fraud, collusion, or where the supplier is non-existent or without assets. Cases Referred by Court:• Union of India v. Bharti Airtel Ltd. • Arise India Limited v. Commissioner of Trade and Taxes, Delhi • Commissioner of Trade and Taxes v. Arise India Limited (SLP dismissed)
Suncraft Energy Private Limited & Anr. v. Assistant Commissioner, State Tax, Ballygunge Charge & Ors. 02-08-2023
Facts The appellant availed Input Tax Credit on purchases made from a supplier and paid the tax amount along with the value of goods/services. The department issued notices alleging mismatch between GSTR-2A and GSTR-3B and non-reflection of supplier invoices in GSTR-1. A demand order under Section 73(10) was passed reversing ITC along with interest and penalty. The writ petition was disposed of directing the appellant to file a statutory appeal, which led to the present intra-court appeal. Court Decision:The High Court set aside the demand order and held that reversal of ITC was not justified without first taking action against the selling dealer. The Court held that when the purchasing dealer has fulfilled conditions under Section 16(2), including possession of invoice, receipt of goods/services, and payment of tax, ITC cannot be denied merely due to non-reflection in GSTR forms. It was further held that proceedings against the purchaser can arise only in exceptional circumstances such as fraud, collusion, or where the supplier is non-existent or without assets. Cases Referred by Court:• Union of India v. Bharti Airtel Ltd. • Arise India Limited v. Commissioner of Trade and Taxes, Delhi • Commissioner of Trade and Taxes v. Arise India Limited (SLP dismissed)
BackgroundThe petitioners challenged notices denying ITC on purchases and demanding penalty and interest. The GST authorities alleged that the suppliers were fake and non-existing, their bank accounts had been opened using fake documents, the petitioners had not verified their genuineness and identity, and the suppliers' registrations had subsequently been cancelled retrospectively covering the relevant transaction period.The petitioners contended that the transactions were genuine and supported by the required documents. They stated that the suppliers' registrations were shown as valid on the Government portal at the time of the transactions, payments including GST were made through banking channels, and the invoices were reflected on the GST portal in GSTR-2A. They argued that they could not be penalised merely because the suppliers were subsequently found to be fake unless the department established concrete material showing collusion between the purchasers and suppliers.Court ObservationThe Court observed, subject to further verification, that it could not be said that the petitioners had failed to comply with any statutory obligation before entering into the transactions or in verifying the genuineness of the suppliers.The Court directed that the genuineness of the transactions, actual payment of purchase consideration and GST, timing of the transactions vis-à-vis cancellation of the suppliers' registrations, and compliance with the statutory obligation to verify the identity of the suppliers should be examined. The Court also required consideration of the judgments relied upon by both sides.Final VerdictThe writ petitions were disposed of by remanding the matters to the concerned respondents for fresh consideration of the petitioners' entitlement to ITC. If the documents establish that the purchases were genuine, supported by valid documents and made before cancellation of the suppliers' registrations, the petitioners were to be granted the benefit of ITC.The authorities were directed to pass a reasoned and speaking order after giving an effective opportunity of hearing, considering the judgments relied upon by the petitioners, within eight weeks from communication of the order.
LGW Industries Limited & Ors. v. Union of India & Ors. 13-12-2021
BackgroundThe petitioners challenged notices denying ITC on purchases and demanding penalty and interest. The GST authorities alleged that the suppliers were fake and non-existing, their bank accounts had been opened using fake documents, the petitioners had not verified their genuineness and identity, and the suppliers' registrations had subsequently been cancelled retrospectively covering the relevant transaction period.The petitioners contended that the transactions were genuine and supported by the required documents. They stated that the suppliers' registrations were shown as valid on the Government portal at the time of the transactions, payments including GST were made through banking channels, and the invoices were reflected on the GST portal in GSTR-2A. They argued that they could not be penalised merely because the suppliers were subsequently found to be fake unless the department established concrete material showing collusion between the purchasers and suppliers.Court ObservationThe Court observed, subject to further verification, that it could not be said that the petitioners had failed to comply with any statutory obligation before entering into the transactions or in verifying the genuineness of the suppliers.The Court directed that the genuineness of the transactions, actual payment of purchase consideration and GST, timing of the transactions vis-à-vis cancellation of the suppliers' registrations, and compliance with the statutory obligation to verify the identity of the suppliers should be examined. The Court also required consideration of the judgments relied upon by both sides.Final VerdictThe writ petitions were disposed of by remanding the matters to the concerned respondents for fresh consideration of the petitioners' entitlement to ITC. If the documents establish that the purchases were genuine, supported by valid documents and made before cancellation of the suppliers' registrations, the petitioners were to be granted the benefit of ITC.The authorities were directed to pass a reasoned and speaking order after giving an effective opportunity of hearing, considering the judgments relied upon by the petitioners, within eight weeks from communication of the order.
