2023 (5) TMI 167 - HC - GST

Denial of ITC - R1 accepted the genuineness of transaction - R3 observed that, Input Tax Credit (ITC) had been availed allegedly, fraudulently - Rule 86A of the Tamil Nadu Goods and Services Tax Rules, 2017 - HELD THAT - True, R3 ought to have made reference to order of R1 dated 16.07.2021 and undoubtedly, this is a flaw in the assessment order. However, it is not a fatal flaw. The power of an assessing officer under Section 73/74 is wide and proceedings for assessment may be initiated in any circumstance where it appears to the proper officer that the claim of ITC by an assessee is incorrect - The mere fact that an order has been passed under Rule 86A(2) will not stand in the way of the assessing officer making an assessment or curtailing his powers in any way, in such an exercise. Since the question of 'movement of goods' is one of the fact and the impugned order proceeds on the basis that the facts required to adjudicate this aspect were not provided by the petitioner, the impugned order is confirmed. This writ petition is dismissed.

Summary

Issues involved:
The judgment deals with the blocking of a dealer's bank account under Rule 86A of the Tamil Nadu Goods and Services Tax Rules, 2017, and subsequent assessment of Input Tax Credit (ITC) availed allegedly fraudulently.

Blocking of Bank Account:
The petitioner, a dealer under the Tamil Nadu Goods and Services Tax Act, had their bank account blocked under Rule 86A due to alleged fraudulent availing of ITC. The Assistant Commissioner issued a notice and after hearing the petitioner, unblocked the account on 16.07.2021. The Rule allows for blocking of credit if fraud is suspected, with provisions for lifting the block if conditions change.

Assessment of ITC:
After the block was lifted, the assessing officer issued notices based on information that suppliers were non-existent. The petitioner responded citing the previous unblocking order, but a subsequent assessment on 05.01.2023 concluded that transactions were with fictitious dealers. The petitioner argued against this conclusion, highlighting discrepancies in the assessment process.

Critical Evaluation of Assessment:
The assessing officer relied on Section 16(2) of the Act, emphasizing the need for the dealer to establish the movement of goods for claiming ITC. The officer found that the petitioner failed to provide necessary documents like weighment slips and vehicle receipts, leading to the conclusion that transactions were fictitious. The assessment also pointed out circular transactions in the bank statements.

Judicial Decision:
The court acknowledged flaws in the assessment order, including the failure to reference the previous unblocking order. However, it upheld the assessment, stating that the assessing officer's wide powers under Section 73/74 allow for such actions. The court refused to intervene, emphasizing that the burden of proof regarding the movement of goods was not met by the petitioner. The writ petition was dismissed, allowing the petitioner to file an appeal within four weeks.