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2025 (2) TMI 1152 - HC - GSTLiability to pay GST demand for the Assessment Years 2017-2018 2018-2019 and 2019-2020 - it is alleged that petitioner was indulging in passing Input Tax Credit to facilitate evasion of tax - respondent submit that entire tax liability has been borne by the petitioner out of the Input Tax Credit availed by the petitioner which was passed on by the respective dealers. HELD THAT - The law on the subject has been settled by the Division Bench of this Court in Sahyadri Industries Limited Vs. State of Tamil Nadu 2023 (4) TMI 912 - MADRAS HIGH COURT . Although the said decision was rendered in the context of Tamil Nadu Value Added Tax (TNVAT) Act 2006 the ratio therein will squarely apply to the facts of the case under the Central Goods and Services Tax (CGST) Act 2017 and the Tamil Nadu Goods and Services Tax (TNGST) Act 2017. The fact remains that the petitioner has discharged the entire tax liability from and out of the Input Tax Credit availed from the invoices raised by the above mentioned suppliers. There is no payment of tax in cash by the petitioner. Prima facie there are indications that the petitioner acted as an accessory to pass an ineligible Input Tax Credit. Petition dismissed.
The issues presented and considered in the judgment are as follows:1. Whether the petitioner is liable for GST demand for the Assessment Years 2017-2018, 2018-2019, and 2019-2020?2. Whether the Input Tax Credit availed by the petitioner from certain dealers is eligible?3. Whether the petitioner's transactions with specific dealers were genuine or part of a tax evasion scheme?Detailed Analysis:Issue 1: Liability for GST DemandThe court considered the Assessment Orders confirming the demand of GST for the Assessment Years in question. The petitioner, a dealer in scrap steel, had transactions with various dealers during the relevant years. The respondents argued that the petitioner had transactions with non-existing dealers who passed ineligible credit, leading to the denial of Input Tax Credit.Key evidence included statements recorded from the petitioner and Show Cause Notices issued by the respondents. The petitioner contended that they had made payments to the dealers in cash/cheques, and produced invoices and returns to support their claim of eligibility for Input Tax Credit.The court noted that earlier summons were issued by the Central Authority under the CGST Act, despite the petitioner being assessed by State Authorities. Ultimately, the court found that there were indications that the petitioner acted as an accessory to pass ineligible Input Tax Credit, leading to the dismissal of the writ petitions.Issue 2: Eligibility of Input Tax CreditThe court examined the documents provided by the petitioner, including tax invoices, e-way bills, bank statements, and GSTR-2A returns. The respondents alleged that the suppliers were bill traders, rendering the Input Tax Credit ineligible. The petitioner argued that the suppliers filed monthly returns and that the rejection of the GSTR-2A return amounted to double taxation.The court considered the arguments and found that the petitioner had not paid tax in cash, relying solely on Input Tax Credit from the suppliers. This fact, coupled with the lack of response from the respondents on the GSTR-2A return, led to the dismissal of the writ petitions.Issue 3: Genuine Transactions vs. Tax EvasionThe court reviewed a communication listing out the names of supplying dealers with whom the petitioner had transactions. The respondents contended that these transactions were not bona fide and accused the petitioner of facilitating tax evasion by passing Input Tax Credit. The court also noted that some dealers had approached the court in a separate writ petition.The court considered the precedents cited by the respondents and found that the petitioner had failed to establish the genuineness of the transactions. Consequently, the court dismissed the writ petitions, granting the petitioner the liberty to file a Statutory Appeal before the Appellate Commissioner.Significant Holdings:The court relied on the decision in Sahyadri Industries Limited Vs. State of Tamil Nadu to establish that the petitioner's actions in passing ineligible Input Tax Credit warranted dismissal of the writ petitions. The court emphasized that the petitioner had not paid tax in cash and was complicit in the scheme.In conclusion, the court dismissed the writ petitions, highlighting the petitioner's role in passing ineligible Input Tax Credit and granting them the option to appeal before the Appellate Commissioner.
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