DENIAL OF ITC DUE TO SUPPLIERS REGISTRATION HAS BEEN CANCELLED UNDER SECTION 29(2)(e), Goods and Services Tax - GST

[Mehul Pandya]

DEAR EXPERT,

MY QUERY IS UNDER.

I AM MANUFACTURING FIRM. I AM PURCHASING RAW MATERIAL FROM DIFFERENT SUPPLIERS. SOMETIMES WE ARE PURCHASING FROM AGENTS. SO WE DONT KNOW THE SUPPLIER PERSONALY. WE HAVE RECEIVED 3 DIFFERENT DRC-01 FOR THE F.Y.2018-19 STATING THAT SUPPLIERS REGISTRATION CANCELLED SUO MOTO. HENCE ITC NEED TO REVERSE. INITIALLY THEY HAVE ISSUED SUMMON TO US AND WE HAVE SUPPLIED DOCUMENTS AS THEY REQUIRED. BUT OFF THE RECORD, THEY TOLD US THAT WHEN EVER ANY SUPPLIERS GST NUMBER CANCELLED WE DEMAND ITC FROM THE RECEIPIENT TOO. IN ONE NOTICE THEY EVEN NOT ISSUED DRC-01A. WE HAVE DOCUMETS LIKE INVOICE, EWAY BILL, PAYMENT PROOF. WHAT CAN BE DONE IN THIS CASE.

Posts / Replies

[Sadanand Bulbule]

Dear querist

The general observation is that If the registration was live as on the date of purchases of goods/services, then you have a strong case and judicial rulings are in your favour.

However the subject purchases are alleged to have been made from the dealers involved in fraud, wilful misstatement or suppression of facts in terms of Section 29[2][e], then it is difficult for you to convince the authorities satisfactorily as regards to the entitlement of ITC on such purchases, unless you strongly substantiate all the conditions of Section 16 with unimpeachable evidences.

[RaamSrinivasan Kalpathi]

If you do not intend to reverse ITC with applicable interest u/s.50, then be prepared for a long drawn battle with the department.  To assist, you may keep the following documents ready, viz.

a)     Supplier tax invoice - please check if the supplier invoice conforms to the details mandated as per Rule 46

b)     eway bill

c)     Vehicle details with ack. of the your company taking delivery

d)     Payment details for the said invoice

e)     Proof for physical movement of the goods to the location of the recipient, etc.

Kindly also scrupulously follow paradigm SC ruling in the case of Ecom Gill Coffee Trading Private Limited.  Thanks