Assessee cannot be asked to approach the appellate authority if it was not made a party to the original application

The Hon'ble Calcutta High Court in the matter of M/s. Gayatri Projects Limited & anr. v. The Assistant Commissioner of State Tax, Durgapur Charge & Ors. [M.A.T No.2027 of 2022 with I.A. No. CAN 1 of 2022 dated January 5, 2023] set aside the ruling passed by the AAR denying ITC to the buyer and remanded the matter back for fresh consideration. Held that,where sufficient factual details were not placed before the AAR, the assessee should not be left remediless, without hearing them. Further held that, directing the assessee to prefer an appeal will not be effective as the facts, which it seeks to bring on recordwere not a part of the records before the original authority.

Facts

An Advance Ruling was sought by Eastern Coalfields Limited ("the Respondent"), wherein, the AAR, West Bengal vide order dated August 9, 2021 ("the Impugned Order") ruled that the Respondent was not entitled for Input Tax Credit ("ITC") on the invoices raised by M/s. Gayatri Projects Limited ("the Appellant").

The Appellant had issued invoices to the Respondent for the months January – March, 2020 for which returns were filed in November 2020 and therefore the Respondent had to reverse the ITC. The Appellant was not heard by the AAR, as they were not made a party to such application even though they had raised the invoices for which the ITC was claimed. 

The Appellant has contended that the Respondent had not placed incomplete and insufficient facts before the AAR. Further, the Appellant requested the Respondent to prefer an appeal to the appellate authority, which was not considered by the Respondent. Hence, the Appellant filed the writ petition against the Impugned Order, on the grounds that the non-payment of the GST amount charged by the Respondent to the Appellant is violative of Article 19(1)(g) and Article 300A of the Constitution of India, wherein, the Single Judge Bench declined to grant any interim order. 

Being aggrieved this appeal has been filed.

Issue

Whether the Impugned Order is liable to be set aside on the grounds that sufficient factual details were not placed before the AAR?

Held

The Hon’ble Calcutta High Court in M.A.T No.2027 of 2022 with I.A. No.CAN 1 of 2022has held as under:

• Noted that, the actions of the Respondent in not preferring an appeal cannot be used to violate the Appellant's rights.
• Observed that, the invoices, which were subject matter of consideration by the AAR, were the invoices raised by the Appellant. Therefore, the Appellants should have been put on notice by the AAR or the Respondent ought to have impleaded the Appellant in the proceedings before the AAR.
• Stated that, the Appellant cannot be non-suited due to an order of the AAR, without hearing them, therefore they should not be remediless.
• Opined that, sufficient factual details were not placed before the AAR, and directing the Appellant to prefer an appeal will not be effective as the facts, which it seeks to bring on record, were not a part of the records before the original authority.
• Held that, the matter needs to be re-examined by the original authority, instead of directing the Appellant to approach the appellate authority.
• Set aside the Impugned Order and remandedthe matter back for fresh consideration.
• Directed the AAR to issue notices to the Appellant as well as the Respondent and hear the matter afresh and pass orders on merit and in accordance with law.