“Tax Justice Prevails: Fairdeal Metals Exonerated”

In the legal case of Fairdeal Metals Ltd. versus the Assistant Commissioner of Revenue, State Tax, Bureau of Investigation (NB), the Calcutta High Court reached a decision regarding the responsibility for fraudulent Input Tax Credit (ITC) claims by a supplier. Fairdeal Metals Ltd., the petitioner, had procured goods from M/s Navaraj Trading Company, a recently registered supplier under the CGST Act in Assam. However, the Supplier failed to provide adequate documentation regarding the legal occupancy of its business premises, as required by tax laws.

Subsequently, a Show Cause Notice was issued to Fairdeal Metals Ltd., alleging discrepancies in the Supplier’s tax filings and accusing them of being involved in a scheme to evade taxes through bogus ITC claims. Despite the Supplier’s subsequent deposit of the ITC before the Notice was issued, Fairdeal Metals Ltd. was directed to pay penalties, and their goods were detained.

Challenging this decision, Fairdeal Metals Ltd. filed a writ petition, questioning their liability for penalties related to the Supplier’s actions.

The key issue before the court was whether Fairdeal Metals Ltd. could be held accountable for the wrongful ITC claims made by the Supplier.

In its ruling, the Calcutta High Court noted that the Supplier’s payment of the ITC prior to the issuance of the Notice contradicted allegations of tax evasion. Additionally, the court emphasized that Fairdeal Metals Ltd. should not be penalized for the actions of the Supplier, especially considering that the Supplier had fulfilled its tax obligations.

As a result, the court overturned the decision to impose penalties on Fairdeal Metals Ltd. and ordered the immediate release of their goods.

In conclusion, the court’s decision clarified that Fairdeal Metals Ltd. was not liable for penalties related to the Supplier’s fraudulent activities, thereby upholding fairness and justice in taxation matters.