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2024 (7) TMI 54 - HC - GSTChallenge to assessment order - violation of principles of natural justice - entitlement to ITC - non-existent supplier - HELD THAT - Without the respondent stating the basis for the conclusion that fake invoices were issued and submitting relevant documents it is not possible for the petitioner to respond to the allegation. As regards the conclusion that the petitioner did not satisfy the requirements of Section 16(2)(b) it appears from the documents submitted by the petitioner that lorry receipts and weighment slips were not provided. In that respect the petitioner failed to fulfill the obligation of establishing actual movement of goods in terms of Section 16(2)(b). Reconsideration is necessary subject to putting the petitioner on terms. On instructions learned counsel for the petitioner states that the petitioner agrees to remit 20% of the disputed tax demand as a condition for remand after giving credit to amounts if any already remitted by the petitioner. The impugned order dated 07.03.2024 is set aside subject to the condition that the petitioner remits 20% of the disputed tax demand in the aggregate after giving credit to amounts remitted earlier within three weeks from the date of receipt of a copy of this order.
Issues involved:
Assessment order challenged on grounds of breach of natural justice regarding Input Tax Credit (ITC) availed from a supplier accused of being non-existent. Analysis: 1. The petitioner availed ITC from a supplier, J.Minar Traders, and faced proceedings due to allegations of non-entitlement to ITC as the supplier was claimed to be non-existent. The petitioner responded with evidence including tax invoice, bank statement, e-way bill, and GSTR 2A. The impugned order was issued based on these facts. 2. The petitioner argued that despite providing relevant documents, ITC was denied. The petitioner claimed the supplier filed returns during the period, and the supplies were reflected in GSTR 2A. Citing precedents like DY Beathal Enterprises v. State Tax Officer, the petitioner contended that ITC should not be denied in such circumstances. 3. The respondent, represented by the Government Advocate, argued that the burden of proof lies with the taxpayer to establish entitlement to ITC, including proving the movement of goods. It was claimed that the petitioner did not provide documents like lorry receipts or weighment slips to prove the actual movement of goods, justifying the reversal of ITC under Section 16(2)(b) of GST statutes. 4. The impugned order stated that the supplier's business was fake based on prior investigations, and the petitioner failed to prove the movement of goods. The respondent concluded that the petitioner did not meet the requirements of Section 16(2)(b) due to the absence of certain documents. 5. The Court found that the respondent's conclusions lacked a proper basis as the petitioner was not provided with the documentary evidence supporting the claim of fake invoices by the supplier. The petitioner was directed to remit 20% of the disputed tax demand for reconsideration, with the condition that the respondent must provide relevant particulars and documents for the petitioner to respond adequately. 6. The Court set aside the impugned order, directing the petitioner to remit the specified amount within three weeks. The respondent was instructed to provide necessary details regarding the claim of fake invoices, allowing the petitioner to respond. A fresh order was to be issued within three months after the petitioner's reply, ensuring a reasonable opportunity for the petitioner, including a personal hearing. 7. The writ petition was disposed of under the mentioned terms without costs, closing related motions.
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