2023 (10) TMI 947 - HC - GST

Wrong availment of input tax credit - demand of tax alongwith penalty - HELD THAT - Admittedly, the concept of input tax credit has been introduced in the tax regime prior to G.S.T. which is being followed in the current regime also. The scheme of input tax credit is being introduced with an object to avoid cascading effect of tax. The purchasing dealer can avail the input tax credit on tax paid on its purchase whereas manufacturer can avail the same on purchase of its raw material used for manufacturing or selling of its final product which will avoid double taxation. The benefit of concession / I.T.C. under the tax statute can be availed only on fulfilment of certain conditions or restrictions as stipulated under the Act. In the event of breach of any of the conditions as enumerated under the Act, no benefit can be conferred to the dealer. On brief reading of the sections 16 and 74, it is evident that in the event of wrong availment of input tax credit, the proceedings can be initiated against the registered person or registered dealer but at the same time, restrictions has been imposed upon the authorities that without putting notice to the dealer, no adjudication proceeding can be initiated. In the case in hand, the petitioner has only brought on record the tax invoices, e-way bills, GR and payment through banking channel, but no such details such as payment of freight charges, acknowledgement of taking delivery of goods, toll receipts and payment thereof has been provided. Thus in the absence of these documents, the actual physical movement of goods and genuineness of transportation as well as transaction cannot be established and in such circumstances, further no proof of filing of GSTR 2 A has been brought on record, the proceeding has rightly been initiated against the petitioner. The Apex Court in the case of State of Karnataka Vs. M/s Ecom Gill Coffee Trading Private Limited 023 (3) TMI 533 - SUPREME COURT while considering the pari materia of section 70 of the Karnataka Value Added Tax Act, 2003, where the burden was upon the dealer to prove beyond doubt its claim of exemption and deduction of ITC, Hon ble the Apex Court has held that primarily burden of proof for claiming the input tax credit is upon the dealer to furnish the details of selling dealer, vehicle number, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. to prove and establish the actual physical movement of the goods. Further by submitting tax invoice, e-way bill, GR or payment details is not sufficient. Similarly, this Court in the case of the Commissioner Commercial Tax Vs. M/s Foods Ltd. 2023 (8) TMI 1130 - ALLAHABAD HIGH COURT has held that the primary responsibility of claiming the benefit is upon the dealer to prove and establish the actual physical movement of goods, genuineness of transactions, etc. and if the dealer fails to prove the actual physical movement of goods, the benefit cannot be granted. Thus, no interference is called for by this Court in the impugned orders - petition dismissed.

Summary

Issues Involved:
1. Functionality of GST Tribunal in Uttar Pradesh.
2. Legality of the input tax credit (ITC) claim by the petitioner.
3. Conditions for availing ITC under the UP GST Act.
4. Burden of proof for ITC claims.
5. Physical movement and genuineness of goods for ITC.

Summary of Judgment:

Functionality of GST Tribunal in Uttar Pradesh:
The High Court entertained the Writ Tax due to the non-functionality of the GST Tribunal in Uttar Pradesh as per the Gazette notification dated 14.09.2023.

Legality of the Input Tax Credit (ITC) Claim by the Petitioner:
The petitioner challenged the order dated 04.10.2019 by the Commercial Tax Officer and the subsequent order dated 06.03.2021 by the Additional Commissioner, which demanded Rs. 12,32,148/- for wrong availment of ITC under Section 74 of the UP GST Act.

Conditions for Availing ITC under the UP GST Act:
The petitioner argued that ITC should not be denied if the selling dealer did not deposit the tax, as the petitioner had paid through banking channels. The petitioner cited judgments from other High Courts to support their claim.

Burden of Proof for ITC Claims:
The respondent contended that under Section 16 of the UP GST Act, the petitioner must prove beyond reasonable doubt the actual transaction, including physical movement of goods, payment of freight charges, and other details. They relied on the Supreme Court judgment in State of Karnataka Vs. M/s Ecom Gill Coffee Trading Private Limited, which held that the burden of proof lies on the purchasing dealer.

Physical Movement and Genuineness of Goods for ITC:
The Court noted that the petitioner failed to provide sufficient evidence of the physical movement of goods, such as payment of freight charges, toll receipts, and acknowledgment of delivery. The Court emphasized that mere submission of tax invoices, e-way bills, and payment details is insufficient to claim ITC.

Conclusion:
The Court dismissed the writ petition, stating that the petitioner failed to prove the actual physical movement of goods and the genuineness of the transaction. The recent Supreme Court judgment in M/s Ecom Gill Coffee Trading Private Limited was deemed applicable, reinforcing that the burden of proof for ITC claims rests with the dealer.