2024 (7) TMI 1098 - HC - GST

Input Tax Credit - ineligible commodities as per sub-section (5) of Section 17 of applicable GST statutes - ITC for supplies from cancelled dealers, who had not remitted tax dues - HELD THAT - As regards the first issue, the petitioner stated that materials classified under HSN Code 7204 were procured and that such materials do not fall within the scope of Section 17(5) since they were used in furtherance of business. The petitioner enclosed relevant invoices and e-way bills. With regard to the second issue, the petitioner pointed out that a supplier, whose registration certificate was cancelled cannot generate e-way bills. The petitioner enclosed relevant invoices, e-way bills and the supplier's returns as proof of payment of tax by such supplier. In the impugned order, there are no findings in respect of the first issue. As regards the second issue, the tax proposal was confirmed on the ground that the petitioner did not establish movement of goods by producing lorry receipts, weighment slips and payments made to the supplier. None of these documents were called for in the show cause notice which proceeded on a completely different basis. Therefore, the impugned order cannot be sustained. The impugned order dated 28.04.2024 is set aside and the matter is remanded for re-consideration. The petitioner is permitted to submit an additional reply by enclosing all relevant documents with regard to movement of goods. Such additional reply shall be submitted within fifteen days from the date of receipt of a copy of this order - petition disposed off by way of remand.

Summary

Issues:
Challenging an order in original dated 28.04.2024 on grounds of Input Tax Credit for allegedly ineligible commodities and supplies from cancelled dealers not remitting tax dues.

Analysis:
The petitioner received a show cause notice on 28.12.2023 regarding two issues. The first issue was about claiming Input Tax Credit for allegedly ineligible commodities under Section 17(5) of GST statutes. The second issue concerned claiming ITC for supplies from cancelled dealers who did not pay tax dues. The petitioner responded to the notice on 12.01.2024, providing details and documents related to the supplies from M/s.VK Impex and the payment of taxes by the supplier. However, the impugned order issued on 28.04.2024 did not address the first issue of Input Tax Credit for MS Scrap and raised concerns about the movement of goods without requesting specific documents like lorry receipts or weighment slips.

The petitioner's counsel argued that the impugned order lacked discussion on the first issue of Input Tax Credit for MS Scrap and that the petitioner was not asked to explain the movement of goods. The counsel highlighted that the petitioner had already submitted relevant invoices, e-way bills, and proof of tax payment by the supplier. On the other hand, the Government Advocate referred to Sections 16 and 155 of GST statutes, stating that the burden of proof for claiming Input Tax Credit lies with the taxpayer. Due to the petitioner's alleged failure to provide documents like lorry receipts and weighment slips, the assessing officer confirmed the tax proposal.

Upon reviewing the show cause notice, it was noted that there were two tax proposals: one related to Input Tax Credit for ineligible commodities under Section 17(5) and the other regarding recovery of ITC due to the supplier not paying taxes. The petitioner had responded to both issues, clarifying that the materials procured were used for business purposes and providing evidence of tax payment by the supplier. However, the impugned order did not address the first issue and confirmed the tax proposal for the second issue based on the lack of evidence regarding the movement of goods.

Consequently, the court set aside the impugned order dated 28.04.2024 and remanded the matter for reconsideration. The petitioner was granted the opportunity to submit an additional reply within fifteen days, including all relevant documents related to the movement of goods. The respondent was directed to provide a reasonable opportunity for a personal hearing and issue a fresh order within three months from receiving the petitioner's additional reply. The case was disposed of with no costs incurred, and related motions were closed as a result.