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Dear Professional Colleagues,

Greetings of the Day !

Hon’ble High court of Calcutta in case of Gargo Traders [2023] 151 270 (Calcutta) pronounced a taxpayer-friendly ruling stating that No ITC shall be disallowed even if the supplier’s registration is cancelled.


Detailed facts of the same are as below:

Facts of the case

  • Taxpayer has filed the present writ application challenging the order passed by Joint Commissioner, State Tax, West Bengal, dated 13 April, 2022 wherein the appeal preferred by the petitioner is rejected.
  • Taxpayer claimed credit of input tax against supply made from a supplier for the period from 01.04.2018 to 31.03.2019.
  • The petitioner is aggrieved by the impugned order for refusing to grant the benefit of Input Tax Credit on such purchases.
  • Tax department contended that on inquiry, they came to know that the supplier is fake and non-existing and the bank accounts open by the said supplier is on the basis of fake document.
  • Tax department also contended also that the petitioner has not verified the genuineness and identity of the supplier whether he is a registered taxable person, before entering into any transaction with the supplier. Registration of the supplier in question has already been cancelled with retrospective effect covering the transaction period of the petitioner.
  • Taxpayer has filed supplementary affidavit by enclosing tax invoice, e-Way Bill, transportation bill and statement of bank account showing the payment in favour of the supplier. Taxpayer contended that the tax department had not considered the said documents.



  • HC noted that admittedly at the time of the transaction, the name of the supplier as a registered taxable person was already available with the Government record, and the petitioner had paid the amount of purchased articles as well as tax on the same through bank and not in cash. Tax department has not contended that there is a collusion between the taxpayer and supplier with regard to the transaction.
  • HC  found that without proper verification, it cannot be said that there was any failure on the taxpayer’s part in compliance with any obligation required under the statute before  entering into the transactions in question

Hope you find it interesting and useful to read.

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