2023 (10) TMI 933 - HC - GST

Maintainability of petition - availability of alternative remedy - Input Tax Credit denied - availment and utilisation of ITC by the petitioner against invoices issued without actual receipt of goods - inadmissibility in terms of Section 16 of the CGST Act - HELD THAT - The Assessing Authority has passed a detailed order considering the objections/reply of the petitioner filed to the Show Cause and has returned the finding that the petitioner has availed the ITC and further utilized the same against tax invoices issued by suppliers without actual receipt of the goods and has accordingly held the petitioner to be liable. There is no dispute about the legal position that availability of an alternative remedy is not an absolute bar for exercise of jurisdiction under Article 226 of the Constitution of India, where there is clear violation of the procedure established by law or in violation of the elementary principles of natural justice However in the case at hand the impugned order is a reasoned and speaking order passed after affording opportunity of hearing to the petitioner and considering it objection/reply. The Apex Court recently in the case of THE STATE OF KARNATAKA VERSUS M/S ECOM GILL COFFEE TRADING PRIVATE LIMITED 2023 (3) TMI 533 - SUPREME COURT while dealing with similar issue as raised in the instant writ petition observed that ITC can be claimed only on genuine transactions of sale and purchase. For claiming ITC, genuineness of the transaction and actual physical movement of the goods are the sine qua non and the aforesaid can be proved only by furnishing the name and address of the selling dealer, details of the vehicle which has delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. According to the dictum of the Apex Court, the purchasing dealer, over and above the invoices and the particulars of payments, has to produce further material like the name and address of the selling dealer, details of the vehicles which has delivered the goods, payment of fright charges, acknowledgement of taking delivery of goods including actual physical movement of the goods, alleged to have been purchased from the concerned dealers. This is not a fit case where the efficacious alternative remedy available to the petitioner can be bye passed - the writ petition is dismissed on the ground of alternative remedy.

Summary

Issues:
The judgment involves the admissibility of Input Tax Credit (ITC) availed against invoices issued without actual receipt of goods, demand and recovery of ITC amount, penalty on non-existent suppliers for issuing fake invoices, and the petitioner's contention regarding the ITC claimed based on invoices from certain suppliers.

Admissibility of Input Tax Credit (ITC):
The writ petition challenged an order holding the ITC availed by the petitioner against invoices issued without actual receipt of goods to be inadmissible under Section 16 of the CGST Act, 2017. The demand and recovery of ITC amounting to Rs. 15,64,58,361 based on fake invoices from non-existent suppliers were confirmed. Additionally, penalties were imposed on the non-existent suppliers for issuing tax invoices without actual supply of goods or services.

Petitioner's Contention on ITC Claim:
The petitioner, a Proprietorship concern engaged in trading, claimed ITC of Rs. 50.55 crores based on goods supplied by various suppliers. The petitioner contested allegations that 34 suppliers were suspicious and that ITC was availed on invoices from non-existent firms. The petitioner requested cross-examination of individuals involved in the case, citing a violation of natural justice principles. The petitioner argued that the ITC claimed was legitimate, referencing previous court decisions to support their stance.

Court's Analysis and Decision:
The High Court examined the impugned order and found that the Assessing Authority had provided a detailed reasoning for holding the petitioner liable for availing ITC against invoices without actual receipt of goods. The Court noted that while an alternative remedy was available under Section 107 of the CGST Act, 2017, the impugned order was reasoned and passed after affording the petitioner an opportunity to be heard. Citing a recent Supreme Court case, the Court emphasized the importance of proving the genuineness of transactions and the physical movement of goods to claim ITC. The Court concluded that the petitioner had not sufficiently proven the physical movement of goods from the concerned dealers, justifying the rejection of the ITC claim.

Dismissal of Writ Petition:
Based on the analysis of the case and the availability of an alternative remedy, the Court dismissed the writ petition on the grounds of the existence of a more appropriate legal recourse for the petitioner to challenge the impugned order.