ITC Denied Without Reasoning What the Calcutta HC Said
When a taxpayer’s Input Tax Credit (ITC) is denied, the GST law expects officers to record clear reasons. Recently, the Calcutta High Court in Kumudam Publications Pvt Ltd v. State Tax Officer (WP No. 6993(W) of 2024) stayed a GST demand because the officer denied ITC without giving any reasoning for one supplier.
This interim relief stays the recovery till December 2025, giving the taxpayer time to contest the demand.
Why Proper Reasoning for ITC Denial Matters
Under the CGST Act, 2017, officers must issue a speaking order — meaning it must explain:
- Which part of the ITC claim is disallowed
- The factual basis for disallowance
- Relevant legal provisions cited
Without this, the taxpayer is left unable to defend themselves properly, violating principles of natural justice.
Case Facts at a Glance
| Particulars | Details |
|---|---|
| Petitioner | Kumudam Publications Pvt Ltd |
| Dispute | ITC disallowed for one supplier without reasons |
| HC Observation | Violation of natural justice; no reasoning given |
| Relief Granted | Recovery stayed till December 2025 |
What Should Taxpayers Do in Similar Situations?
If you face an ITC denial:
✅ Ask for the reasoned order in writing
✅ File an appeal under Section 107 of CGST Act
✅ Consider a writ petition if principles of natural justice are violated
✅ Maintain proper supplier records and transaction proofs
Expert Tip for GST Consultants
Always verify if the Show Cause Notice (SCN) and final order explain each disallowed entry. Generic or vague orders are legally weak and often set aside by courts.
Summary
The Calcutta High Court stayed a GST demand where ITC was denied without clear reasoning for one supplier. The court held that lack of a speaking order violates natural justice. Recovery is stayed until December 2025. Taxpayers must ensure proper explanations in GST orders.
FAQs
Q1. Is ITC denial without reasoning valid?
No. Courts require tax officers to issue reasoned orders.
Q2. How to challenge an unreasonable ITC denial?
File an appeal under Section 107 or approach the High Court if natural justice is violated.