2023 (6) TMI 288 - HC - GST

Availment of irregular input tax credit - fake invoices - opportunity of personal hearing was availed of or not - violation of principles of natural justice - HELD THAT - A perusal of the impugned orders would indicate that the petitioner had been issued with notices and also reminders for personal hearing. The orders of the respondent would also indicate that the petitioner has neither filed a reply online nor submit a manual reply. Despite the fact that he was given several opportunities to put forth his objections, the opportunity of personal hearing which was afforded has not been availed off by the petitioner. The petitioner has failed to prove that they complied with the condition eligible to claim input tax credit as per Section 16(2) of the Act on the purchase made from M/s.Star Agencies. The impugned orders set out the fake invoices under which ITC has been passed on to the recipient. It is also seen that the address of M/s.Star Agencies is not a shop at a residential building and the enquires would further show that no business was being carried from the said premises and that the proprietor of Star Agency, Periyaya, had vacated the premises early a year ago. Despite which, it is claimed that the business is being transacted in the said address and the petitioner cannot now state that he has not been given an opportunity to put forth his case. The argument advanced by the petitioner is purely factual and on the basis of the records, all of which cannot be considered by a writ Court. Considering the fact that the petitioner has an effective appellate remedy, these Writ Petitions are dismissed directing the petitioner to file an appeal before the Deputy Commissioner (St).

Summary

Issues involved:
The judgment involves the quashing of assessment orders passed by the respondent in two separate cases for different assessment years.

Issue 1 - Violation of principles of natural justice:
The petitioner, a sole proprietary concern dealing with various products and services, challenged assessment orders alleging non-existent trading activities and claiming ineligible Input Tax Credit (ITC) without original sale transactions. The petitioner contended that the impugned orders were passed without considering their explanations and without providing copies of documents, violating principles of natural justice.

Issue 2 - Rejection of ITC and alternative remedy:
The respondent rejected the ITC claimed by the petitioner based on the closure of the seller's business premises and subsequent cancellation of GST registration. The petitioner argued that the assessment was made without providing an opportunity to present their case and that the transactions were genuine, supported by the seller's compliance with tax obligations. The respondent argued that the petitioner had an effective alternative remedy available but chose to approach the High Court directly.

Judgment:
The High Court observed that the petitioner was given opportunities for personal hearings and to submit objections, which were not fully utilized. The impugned orders highlighted fake invoices and discrepancies in claiming ITC, indicating that the petitioner failed to prove compliance with input tax credit conditions. The Court noted that the seller's premises were found locked and used as a residence, with no business activities taking place. The judgment emphasized that the petitioner's arguments were factual and based on records, not suitable for consideration in a writ Court. As the petitioner had an effective appellate remedy available, the Writ Petitions were dismissed, directing the petitioner to file an appeal within two weeks from the date of the order, with the possibility of condoning the delay in filing the appeal.