Under Section 42 of the CGST Act, tax recovery from purchasers requires prior action against suppliers unless a collusion is established.

JUDGMENT

The petitioner is an assessee under the provisions of CGST Act and this writ petition is submitted by the petitioner, challenging Ext.P3 show cause notice issued under Sec.73 of the CGST Act . As per Ext.P3 notice, the petitioner was directed to show cause, as to why the input tax credit claimed by the petitioner pertaining to the assessment year 2019-2020 should not be disallowed and recovered from the petitioner. In Ext.P3, a penalty was also sought to be imposed in respect of the same.

2. The facts which led to the issuance of Ext.P3, are as follows:-

In respect of the relevant financial year, the petitioner effected certain purchases which are covered by Exts.P5 to P72 invoices from the respondents 2 and 3. According to the petitioner, those are proper tax invoices in the relevant formats in the CGST Act and the respondents 2 and 3 have collected tax from the petitioner in respect of the same. The said documents contain e-way bills corresponding to the invoices issued, indicating the transportation of the goods covered by the invoices as well. On the basis of the same, the petitioner submitted it’s returns and claimed input tax credit in respect of invoices referred to above. However, the 2^nd and 3^rd respondents failed to furnish the details of the supplies made to the petitioner as per the relevant invoices and did not pay the tax covered by the same. It was in these circumstances, Ext.P3 show cause notice was issued to the petitioner. This writ petition is submitted in such circumstances challenging Ext.P3.

3. A counter statement was submitted by the respondents 1 and 4, controverting the averments contained in the writ petition and also opposing the reliefs sought.

4. Even though notices to the respondents 2 and 3 were sent by speed post, the same could not be completed and therefore, notices were served by way of paper publication. Despite the above, there is no appearance on the part of the said respondents.

5. I have heard Sri.M.S.Sajeev Kumar, learned counsel for the petitioner and Sri.R.Harishankar, learned standing counsel for the respondents 1 and 2.

6. The learned counsel for the petitioner mainly raised two grounds while challenging Ext.P3 notice. The first ground is that, since the proceedings have been initiated against the petitioner without initiating any other proceedings against the suppliers, the respondents 2 and 3, as mandated under Section 42 of the CGST Act , as stood prior to 01.10.2022, the petitioner cannot be held responsible. The second contention raised by the learned counsel for the petitioner is with regard to the limitation contemplated under Section 73 of the Act, in initiating the proceedings, which is within three years from the due date for furnishing of annual tax return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilized relates to or within three years from the date of erroneous refund. In this case, it is pointed out that the Assessment Year is 2019-2020, whereas, the proceedings were proposed to be initiated as per Ext.P3 on 20.05.2025 and this is beyond the time limit. The learned counsel for the petitioner also placed reliance upon the decision rendered by the Honourable High Court of Calcutta inSuncraft Energy Pvt.Ltd. v. Assistant Commissioner, State Tax, Ballygunge Charge [(2023) 9 Centax 48(Cal.)], which is confirmed by the Honorable Supreme Court inAssistant Commissioner of State Tax v. Suncraft Energy Pvt.Ltd. [(2023) 13 Centax 189 (S.C)], the decision rendered by the Allahabad High Court inR.T.Infotech v. Additional Commissioner, Grade 2 [(2025) 31 Centax 204 (All.), yet another judgment rendered by the