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TMI Blog2024 (5) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... firms were existing on paper only - Merely because the firm was registered on the date of transaction, it cannot be said that the department is bound to give I.T.C. benefit to the petitioner, even though it has been revealed later on the firm was non-existent and it could not have made any actual supplies. It is settled law that fraud vitiates even the most solemn proceedings and the mere fact that the I.T.C. benefit had earlier been granted to the petitioner merely because the firms were registered, would not create any estoppel against the authority taking appropriate action for claiming refund of the benefit wrongly availed by the petitioner on the ground of receiving inward supplies from non-existent firms. There appears no illegality in the impugned orders - Petition dismissed. - Hon'ble Subhash Vidyarthi, J. For the Petitioner : Anurag Mishra For the Respondent : C.S.C. ORDER HON'BLE SUBHASH VIDYARTHI, J. 1. Heard Sri Pranjal Shukla, learned counsel for the petitioner and Sri Vikram Soni, learned Additional Chief Standing Counsel. 2. By means of the instant petition filed under Article 226 of the Constitution of India, the petitioner has prayed for quashing of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that it had received inward supplies worth Rs. 16,39,200/- from M/s Ridhi Sidhi Enterprises, Rs. 17,25,160/- from M/s Siddhartha Trading Company and Rs. 29,78,025/- from M/s Satvik Enterprises and had claimed I.T.C. claim of Rs. 2,95,056/-, Rs. 2,63,160/- and Rs. 4,54,275/- respectively regarding the goods received from the aforesaid three firms. In support of its claim of actual receipt of inward supplies, the petitioner had submitted invoices, copies of GR (goods receipts), e-way bill, laser and bank statements of the firms, evidence of transaction of amounts through RTGS and evidence of physical receipts of goods. The inward supplies received by the petitioner have been entered in the stock register. 5. The adjudicating authority did not accept the explanation of the petitioner because the Special Investigation Branch, Agra had found the aforesaid three firms, namely, M/s Ridhi Sidhi Enterprises, M/s Siddhartha Trading Company and M/s Satvik Enterprises to be non-existent and bogus and that the tax invoices had been issued without any actual supply of goods upon which the petitioner had fraudulently taken benefit of I.T.C. The adjudicating authority declined the benefit of I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner has further submitted that the GST registration of the aforesaid three firms was cancelled on their own request. 10. The learned counsel for the petitioner has drawn attention of this Court towards the provisions of Section 16(2) of the GST Act, 2017 which provides as follows: 16(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless, (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; [(aa) the details of the invoice of debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under Section 37:] (b) he has received the goods or services or both. [Explanation. For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be services- (i) where the goods are delivered by the supplier to a recipient or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor credit note or any document issued by an Input Service Distributor in accordance with the provisions of sub-rule (1) of rule 54. (2) Input tax credit shall be availed by a registered person only if all the applicable particulars as specified in the provisions of Chapter VI are contained in the said document and the relevant information, as contained in the said document, is furnished in FORM G.S.T.R.-2 by such person: [Provided that if the said document does not contain all the specified particulars but contains the details of the amount of tax charged, description of goods or services, total value of supply of goods or services or both, G.S.T.I.N. of the supplier and recipient and place of supply in case of inter-State supply, input tax credit may be availed by such registered person.] (3) No input tax credit shall be availed by a registered person in respect of any tax that has been paid in pursuance of any order where any demand has been confirmed on account of any fraud, willful misstatement or suppression of facts. [(4) Input tax credit to be availed by a registered person in respect of invoices or debit notes the details of which are required to be furnished by the suppli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em and not punish bona fide purchasing dealers. The latter cannot be expected to do the impossible. It is trite that a law that is not capable of honest compliance will fail in achieving its objective. If it seeks to visit disobedience with disproportionate consequences to a bona fide purchasing dealer, it will become vulnerable to invalidation on the touchstone of Article 14 of the Constitution. 41. The Court respectfully concurs with the above analysis and holds that in the present case, the purchasing dealer is being asked to do the impossible, i.e. to anticipate the selling dealer who will not deposit with the Government the tax collected by him from those purchasing dealer and therefore avoid transacting with such selling dealers. Alternatively, what Section 9 (2) (g) of the DVAT Act requires the purchasing dealer to do is that after transacting with the selling dealer, somehow ensure that the selling dealer does in fact deposit the tax collected from the purchasing dealer and if the selling dealer fails to do so, undergo the risk of being denied the ITC. Indeed Section 9 (2) (g) of the DVAT Act places an onerous burden on a bonafide purchasing dealer. 14. The Delhi High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods . Where a person merely produces document, mentioned in Rule 36 regarding receipt of goods, he has actually not received any goods and it is established that the transaction of goods was merely a paper transaction, without any actual supply of goods, the person will not be entitled to get the benefit of input tax credit in view of the provision contained in Section 16(2)(b) of the GST Act, 2017. 18. Undisputedly, the petitioner had fulfilled the requirements and, therefore, the input tax credit was claimed and was granted to him. However, when an enquiry was conducted by the Special Investigation Branch subsequently, it came to light that the firms from which the petitioner claimed to have received inward supplies, were non-existent and bogus. Neither the firms were found on the addresses, claimed by them, nor was any godown or other premises of those firms could found. It appears that the firms were existing on paper only. 19. Although, the registration of the firms existed when the petitioner claimed to have obtained inward supplies, the investigation revealed that the firm itself does not exist. In case, GSTIN registration has been obtained in the name of any non-existent fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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