Retrospective cancellation of a supplier's GST registration cannot solely deny Input Tax Credit without proper justification and results in a duty on authorities to provide reasoned orders.

Judgment :

Hiranmay Bhattacharyya, J.

1. Affidavit of service filed in court today be kept with the record.

2. This application under Article 226 of the Constitution of India is at the instance of a registered person under the WEST BENGAL GOODS AND SERVICES TAX ACT , 2017 (‘WBGST Act, 2017’, for short) and is directed against the appellate order dated May 16, 2025 passed by the Joint Commissioner, State Goods and Services Tax Appellate Authority, Siliguri Circle, Siliguri thereby affirming the order of the Assistant Commissioner, State Goods and Services Tax being the adjudicating authority, Siliguri Charge, Siliguri dated August 29, 2024.

3. A show-cause notice under Section 73(1) of the WBGST Act, 2017 was issued alleging that certain discrepancies were found upon examination of the returns filed for the financial year 2019-2020 and the petitioner was asked to pay tax, interest and other amounts arising from such discrepancies or furnish an explanation for the discrepancies mentioned in the said notice within the time limit indicated in the show-cause notice. Petitioner duly submitted his reply to the said show-cause notice. The Proper Officer being the adjudicating authority passed an order dated August 29, 2024 under Section 73(9) of the WBGST Act, 2017. Though four discrepancies under serial nos. 1, 2, 3 and 4 were pointed out in the show-cause notice, but the adjudicating authority after considering the reply to the show-cause notice filed by the petitioner accepted the reply given by the petitioner insofar as discrepancies under serial nos. 1, 2 and 4 are concerned. With regard to the discrepancy under serial no. 3, the Proper Officer held that the petitioner failed to prove the genuineness of transactions beyond doubt and determined the amount of tax, interest and penalty by passing an adjudication order under Section 73(9),

4. Being aggrieved by the order dated August 29, 2024, petitioner preferred an appeal before the appellate authority under Section 107 of the WBGST Act, 2017. The appellate authority passed an order on May 16, 2025 dismissing the appeal thereby affirming the order passed by the adjudicating authority.

5. Thus the discrepancies pointed out under discrepancy nos. 1, 2 and 4 were decided in favour of the petitioner and decision on such points attained finality and the decision of the adjudicating authority and the appellate authority under discrepancy no. 3 is the subject- matter of this writ petition.

6. The issue that falls for consideration is whether the appellate authority was justified in affirming the findings of the adjudicating authority in respect of the discrepancies pointed out under serial no.3.

7. Under discrepancy no. 3 it was alleged that the petitioner availed Input Tax Credit (ITC) on supplies made by the persons whose registration was cancelled retrospectively and that such ITC is not admissible under Section 16 of the CGST and WBGST Act, 2017.

8. Petitioner claims to have submitted various documents before the adjudicating authority and the appellate authority in support of his contention that the purchases made by the petitioner was a bona fide one and there was actual physical movement of the goods from the supplier to the petitioner. Petitioner claims to have submitted various documents namely, tax invoices, e-way bills, transport documents, bank statements, party ledgers etc. to prove the genuineness of the transaction. Petitioner claims to have made payments through proper banking challans within the stipulated time limit. The petitioner further claims that the GST registration of t