• Dated 29^th January, 2026

CALCUTTA HC DIRECTS RECONSIDERATION OF ITC DENIAL ON IMPORTS IN LIGHT OF CUSTOMS REPORTS

Brief Facts of the Case:

The assessee was issued a show cause notice alleging short payment of output tax and excess availment of Input Tax Credit (ITC) on import of goods under the CGST/WBGST Acts. The adjudicating authority confirmed the demand on the ground that the assessee failed to produce certified documents evidencing payment of IGST on imports. The appellate authority dismissed the appeal ex-parte and upheld the adjudication order. Aggrieved, the assessee approached the Calcutta High Court.

Assessee 's Contention:

The assessee contended that denial of ITC on imports was solely due to non-availability of certified IGST payment documents from Customs, despite IGST having been duly paid. It was further argued that the appellate order was passed ex-parte, depriving the assessee of an opportunity to place relevant evidence on record. Pursuant to directions of the High Court, Customs authorities submitted affidavits confirming that IGST had been paid and that non-reflection in the GST portal was due to procedural limitations arising from manual Bills of Entry.

Respondent's Contention:

The respondent authorities supported the adjudication and appellate orders, contending that ITC was rightly denied due to non-production of certified proof of IGST payment at the relevant stage and procedural lapses on the part of the assessee.

Court's Decision:

The High Court observed that the issue of excess availment of ITC on imports was intrinsically linked to payment of IGST, which stood clarified by the reports filed by Customs authorities. Since these reports threw sufficient light on the core issue, the Court set aside the appellate authority's observations on denial of ITC on imports and remanded the matter back for reconsideration in light of the Customs reports. The Court clarified that it had not examined the merits and directed the appellate authority to pass an independent order in accordance with law.

BTA's Comments:

This ruling reinforces that ITC on imports cannot be denied merely due to procedural or system-driven discrepancies, particularly where payment of IGST is substantiated by Customs records. The decision highlights the importance of inter-departmental coordination and affirms that substantive tax benefits should not be denied for technical lapses beyond the Assessee 's control. It also underscores the appellate authority's obligation to consider relevant evidence before confirming ITC disallowances.

Author: Sneha Nandi