Calcutta High Court (Appellete Side)
Ed & F Man Commodities India Pvt. Ltd vs The Assistant Commissioner on 17 January, 2025
Author: Rajarshi Bharadwaj
Bench: Rajarshi Bharadwaj
04
ss 17.01.2025
WPA 10537 of 2024
ED & F Man Commodities India Pvt. Ltd.
Vs.
The Assistant Commissioner, State Tax & Ors.
Mr. Somak Basu
Mr. Swagato Kabiraj
... ... for the petitioner
Mr. Anirban Ray
Mr. Md. T. M. Siddiqui
Mr. Tanoy Chakraborty
Mr. Saptak Sanyal
... ... for the State
1. Learned Counsel appearing for the petitioner
submits that the petitioner became a registered dealer
under the West Bengal Goods and Services Tax Act,
2017, effective from July 1, 2017 and carried out
business activities during the financial year 2017-18,
procuring 11,876 MT of sugar and selling the entire stock
by March 2018. However, due to significant financial
losses in the financial year 2018-19, the petitioner ceased
business operations in the State of West Bengal. Despite
the absence of transactions, the petitioner diligently filed
nil returns under the GST Act up to November 2021 and
annual returns up to the financial year 2019-20.
2. On November 15, 2021, respondent no. 1 issued a
show-cause notice alleging that the petitioner had fraudulently obtained registration through suppression of facts or wilful misstatement, without presenting any evidence to substantiate the claims. The petitioner responded to the notice and sought additional time for WPA 10537 of 2024 2 compliance, citing challenges posed by the ongoing COVID-19 pandemic. However, respondent no. 1 mechanically cancelled the petitioner's GST registration with retrospective effect from July 1, 2017.
3. Aggrieved by the cancellation, the petitioner filed an appeal under Section 107 of the GST Act along with an application for condonation of delay of 116 days. The petitioner explained that the delay was unintentional and caused by extraordinary circumstances. However, the appellate authority rejected both the appeal and the application without adequately addressing the petitioner's grounds.
4. In addition, from August 2022, the petitioner's buyers began receiving notices regarding alleged wrongful availment of Input Tax Credit (ITC) on transactions carried out during the financial year 2017-18. This prompted the buyers to demand refunds from the petitioner for amounts equal to the denied ITC, further compounding the petitioner's financial and legal challenges.
5. Subsequently, the petitioner filed a writ petition before this Hon'ble Court seeking permission to apply for revocation of the cancellation of registration. During the pendency of the writ petition, the Ministry of Finance issued Notification No. 3/2023-GST, allowing taxpayers to apply for revocation of cancellation of registration. Acting under the notification, the petitioner submitted an application for revocation (ARN AA-190423029382C). WPA 10537 of 2024 3
6. However, on June 13, 2023, respondent no. 1 rejected the application, citing a purported physical verification report dated November 14, 2021. The petitioner emphasizes that the report was never mentioned in the original show-cause notice, depriving the petitioner of the opportunity to contest its findings. Dissatisfied, the petitioner filed an appeal under Section 107 of the GST Act, 2017, read with Section 108(1) of the GST Rules, 2017.
7. The appellate authority, respondent no. 2 herein, through its order dated November 30, 2023, upheld the decision of respondent no. 1 solely based on the verification report and an additional inquiry report dated November 24, 2023. The petitioner submits that no reports were served upon them nor made available through the common portal as required under Rule 25 of the GST Rules, 2017, thereby violating the principles of natural justice.
8. The petitioner in the present petition seeks relief from this Hon'ble Court against the appellate authority's order, as it failed to consider the substantive grounds raised and proceeded solely on the basis of unsubstantiated reports, causing severe prejudice to the petitioner.
9. The Learned Counsel representing the respondent authority vehemently contests the submissions advanced by the petitioner. It is asserted that during the spot verification conducted on December 14, 2021, to WPA 10537 of 2024 4 ascertain the existence and business activities of the RTP, officials from JK and JB Charge discovered no trace of the RTP at the premises declared as its principal place of business. Furthermore, inquiries made with local residents, the caretaker of the building and representatives of neighbouring business establishments unanimously revealed that they had neither heard of nor observed any business entity operating under the name RTP conducting any commercial activities from the said premises.
10. Furthermore, the official who carried out the verification is present before this Hon'ble Court and corroborates the submissions made by the Learned Counsel for the respondent authority.
11. Upon hearing the submissions made by both parties, it is evident that the petitioner has not conducted any active business operations for the past five years and is maintaining only a skeletal office with minimal staff. While the petitioner claims compliance with filing nil returns and alleges procedural violations in the cancellation of GST registration, the respondent has raised serious concerns about the non-existence of business activities at the declared principal place of business, substantiated by verification reports and inquiries.
12. In light of these conflicting submissions, this Court deems it necessary to ascertain the factual situation regarding the petitioner's business operations and the WPA 10537 of 2024 5 veracity of the respondent's claims. As the competent officer is present before this Court, the officer is directed to revisit the petitioner's principal place of business and submit a fresh verification report.
13. The petitioner is directed to extend full cooperation to the officer during the verification process. The officer shall complete the inspection and file a detailed report before this Court by 22nd January, 2025.
14. Let this matter again appear in the list on 22nd January, 2025 under the heading "To Be Mentioned".
(Rajarshi Bharadwaj, J.)