2024 (1) TMI 1049 - HC - GST

Blocking of Input Tax Credit - Input Tax Credit (ITC) - Goods purchased from the supplier whose gst registration was cancelled with retrospective effect - the supplier was found to be non-existent and not conducting business. - The petitioner contested this, providing invoices, e-way bills, and bank statements as proof of genuine transactions. - HELD THAT - In view of the production of invoices, e-way bills and proof of payment of invoices in the form of the relevant bank statements, the above conclusion cannot be sustained. Therefore, the impugned order warrants interference. The impugned order also calls for interference because the petitioner was not put on notice that the goods dealt with by the petitioner are different from those dealt with by its supplier, but a finding was recorded on this issue in the impugned order. The impugned order is liable to be quashed for not duly considering the documentary evidence placed on record by the petitioner to establish that the purchases were genuine. Hence, the impugned order is quashed. As a corollary, the matter is remanded for reconsideration by the assessing officer. The petitioner is granted leave to submit any additional documents within ten days from the date of receipt of a copy of this order. Petition disposed off.

Summary

Issues involved:
The issues involved in this case are related to the reversal of Input Tax Credit (ITC) availed by the petitioner in respect of purchases made from a non-existent entity, M/s. Prince Sales Agency, based on the cancellation of its GST registration. The key contention is whether the ITC can be reversed due to the subsequent cancellation of the supplier's GST registration.

Detailed Summary:

Issue 1: Reversal of Input Tax Credit (ITC)
The petitioner, a registered person under GST laws, filed a writ petition against the order reversing the ITC availed from M/s. Prince Sales Agency. The petitioner argued that the reversal was unjust as the supplier's GST registration was cancelled retrospectively. The petitioner provided relevant invoices, e-way bills, and bank statements to prove the genuineness of the purchases. The petitioner relied on the judgment in Jinsasan Distributors case to support the argument that ITC cannot be reversed due to the cancellation of the supplier's GST registration. The petitioner also contested the conclusion in the impugned order that documents were not produced as required under Section 16 of the Tamil Nadu Goods and Services Tax Act, 2017.

Issue 2: Supplier's GST Registration and Obligation to Establish Transaction Genuineness
The Government Advocate argued that M/s. Prince Sales Agency had obtained GST registration in 2020 and had a significant turnover in its first year of operation. Referring to the Sahyadri Industries case, it was contended that the petitioner must establish the genuineness of the transactions to claim ITC, as per Section 16(2) of the TNGST Act read with Rule 36. The obligation to produce relevant documents to prove the transaction authenticity was emphasized, suggesting that the petitioner should seek statutory remedy rather than approach the court under Article 226 of the Constitution of India.

Judgment:
The Division Bench referred to the Supreme Court's decision in the State of Karnataka v. M/s. Ecom Gill Coffee Trading Private Limited, emphasizing the requirement for the assessee to establish the genuineness of transactions to claim ITC. The Court noted that the petitioner had submitted invoice copies, e-way bills, and proof of payment, contradicting the assessing officer's conclusion that documents were not produced. Consequently, the impugned order was quashed for not duly considering the documentary evidence provided by the petitioner. The matter was remanded for reconsideration by the assessing officer, allowing the petitioner to submit additional documents within ten days. The assessing officer was directed to provide a reasonable opportunity to the petitioner and issue a fresh assessment order within four weeks. The writ petition was disposed of without costs, and connected Miscellaneous Petitions were closed.