Calcutta High Court (Appellete Side)
Kamdhenu Udyog P Ltd. & Anr vs The Deputy Commissioner Of Revenue on 12 June, 2025
12.06.2025
Sayandeep/sb
Sl. No. 06
Ct. No. 05
WPA 9957 of 2025
Kamdhenu Udyog P Ltd. & anr.
Vs.
The Deputy Commissioner of Revenue, Bhabanipur
Charge & ors.
Mr. Ankit Kanodia
Ms. Megha Agarwal
Mr. Piyush Khaitan
Ms. Tulika Roy
..... for the petitioners
Mr. Anirban Ray, Ld. GP
Mr. T. M. Siddiqui, Ld. AGP
Mr. Tanoy Chakraborty
Mr. Saptak Sanyal
Mr. Debraj Shaw
..... for the State
1. Challenging the order dated 21st March, 2025 issued under
Section 107 of the WBGST/CGST Act, 2017 (hereinafter
referred to as the said Act) as also the order dated 27th
December, 2023 passed by the proper officer under Section 73
of the said Act for the tax period of July, 2017 to March 2018,
the instant writ petition has been filed.
2. The petitioners' case proceeds on the premise that the
petitioners are engaged in business of manufacturer of poultry
feed under CTH of the Customs Tariff Act, 1985 (hereinafter
referred to as the Tariff Act). Following a scrutiny of the
returns of the petitioners under Section 61 of the said Act, a
notice in form GST ASMT 10 dated 21st July, 2022 was issued
identifying certain discrepancies. The petitioners had duly
responded by the same by filing a response in form GST
ASMT 11 and had clarified therein that although, the
petitioners had wrongly availed the input tax credit (ITC) by
filing returns under Section 39, however, pursuant to the
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directives issued by the anti evasion wing of the CGST
authorities, the petitioners had reversed the ITC wrongly
availed by filing form GST DRC 03 as per particulars which
are provided in a chart annexed to the writ petition at page
85.
3. Although, according to the petitioners, consequent upon
reversal of the unutilized ITC no further anomaly remained
outstanding as the same stood resolved and though such fact
was brought to the notice of the respondents, however, by
ignoring the same not only a pre show-cause notice but a
show-cause notice was issued on the petitioners. Ultimately,
the same culminated in the order dated 27th December, 2023
passed under Section 73 of the said Act. Although, the
petitioners had preferred an appeal from the aforesaid order,
the appellate authority by order dated 21st March, 2025 had
refused to accept the contention of the petitioners that the
voluntary reversal of ITC through form DRC 03 also included
the period 2017-18 and had rejected the appeal by, inter alia,
observing that he agrees with the observations made by the
proper officer.
4. Mr. Kanodia, learned advocate representing the petitioners by
drawing attention of this Court to the chart enclosed to the
writ petition showing particulars of the reversal of the ITC
would submit that although, the reversal was intended for the
tax period of 2017-2018, 2018-2019, 2019-2020, 2020-2021
and 2021-2022, however, due to inadvertence, the entire
reversal though effected, was shown in respect of the tax
period 2018-2019, 2019-2020 and 2021-2022. According to
him, since the sale of poultry feed by the petitioners does not
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attract levy of tax, the petitioners could not have either availed
or utilized ITC.
5. Admittedly, the petitioners have never utilized the ITC which
had been wrongly availed by the petitioners while filing its
returns under Section 39 of the said Act. When the aforesaid
discrepancy came to light with the intervention of the anti
evasion wing of the CGST authorities, the petitioners had
forthwith reversed the ITC. Though while doing so, the
petitioners did not indicate in the DRC 03 forms that the
reversal was also in respect of the financial year 2017-2018.
6. According to him, both the proper officer (adjudicating
authority) and the appellate authority are aware of the
situation. However, since according to the adjudicating
authority and the appellate authority the consolidation of
reversal of ITC for the five financial years in a single financial
year cannot be accepted, the same had been disallowed. In
the facts noted hereinabove, he submits that the above order
cannot be sustained and should be set aside and remanded
back to the proper officer.
7. Mr. Siddiqui, learned senior advocate and Additional
Government Pleader representing the State would submit that
admittedly in this case the petitioners had wrongly availed
ITC, at the same time, he also acknowledges the fact that
though the petitioners had wrongly availed ITC, however, the
petitioners had voluntarily by filing Form GST DRC 03
reversed the same.
8. Having heard the learned advocates appearing for the
respective parties and considering the materials on record, I
prima facie find that this is not a case of evasion of tax but a
case of wrongful availment of ITC by the petitioners which had
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later voluntarily been reversed by the petitioners by filing
Form GST DRC 03, though in the aforesaid process there had
been inadvertent error on the part of the petitioners in not
selecting the relevant tax period for which such reversal was
made in the respective DRC 03 forms. However, the fact that
the reversal of the entirety of ITC was effected cannot be
overlooked. I find that though the proper officer (adjudicating
authority) as also the appellate authority has acknowledged
such aspect and despite observing that the ITC had been
reversed voluntarily by the petitioners by filing Form GST
DRC 03, the benefit thereof has not been extended to the
petitioners citing technical grounds. As rightly pointed out by
Mr. Kanodia, by placing reliance on the judgment delivered in
the case of Rajesh Real Estate Developers Private Limited
vs. Union of India, reported in 2024 (16) Centax 156,
(Bom.), that the inadvertent error in Form GST DRC 03 can
be permitted to be corrected. Similar view has also been taken
by the High Court of Kerala at Ernakulam in the case of Lotus
Pharmaceuticals vs. the Assistant State Tax Officers &
Ors., reported in TS 154 HC(KER) 2025-GST, as also by this
Court in the case of Nivriya India Private Limited vs.
Assistant Commissioner of State Tax, reported in 2024
(23) Centax 315 (Cal).
9. Having regard thereto, I am of the view that the orders passed
both by the proper officer (adjudicating authority) as also by
the appellate authority dated 27th December, 2023 and 21st
March, 2025 respectively, cannot be sustained and the same
are accordingly, set aside and the matter is remanded back to
the proper officer for adjudication having regard to the
observations made hereinabove.
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10. As a sequel thereto, the recovery notice issued under Section
79 of the said Act, dated 5th June, 2025 stands quashed.
11. It is expected that the adjudication shall be completed within
a period of sixteen weeks from the date of communication of
this order, in accordance with law.
12. With the above observations and directions the writ petition is
disposed of.
13. All parties including the proper officer under Section 73 of the
said Act are directed to act on the basis of the server copy of
this order duly downloaded from the official website of this
Hon’ble Court.
14. Urgent Photostat certified copy of this order, if applied for, be
made available to the parties upon compliance with the
requisite formalities.
(Raja Basu Chowdhury, J.)