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TMI Blog2025 (2) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... ized under the respective GST enactments, Input Tax Credit cannot be availed, even if the consideration for the proposed supply of goods or service has not been paid as the case may be - As per 2nd proviso to Section 16(2) of the respective GST enactments, if the recipient fails to pay the supplier the consideration within 180 days of invoice, for the goods and services supplied, other than supplies where tax is payable on reverse charge basis, the recipient will not be entitled to claim Input Tax Credit on the payment made towards the value of Supply. A cumulative reading of Rule 138, 138A and Rule 55A of respective GST Rules of 2017 makes it clear that the goods should accompany e-way Bill for movement of goods where the value of goods exceed Rupees Fifty Thousand. Only where there is exemption from obtaining E-way Bill, it is sufficient that the person in-charge may carry a copy of the tax invoice or bill of supply issued as per the provisions of Rule 46, 46A or 49 of the respective GST Rules of 2017 - Rule 56 in Chapter VII of the respective GST Rules of 2017 contemplates maintenance of accounts by a "registered person". As per Rule 56 in Chapter VII of the respective GST Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57, 23489 to 23491 and 23927 to 23929 of 2023) COMMON ORDER In these Writ Petitions, the respective petitioners have challenged the Impugned Assessment Orders passed on the dates mentioned below pursuant to Remand Orders passed by this Court in the earlier round of litigations. The details of the Writ Petitions filed by the respective petitioners are as under:- Sl. No W.P.(MD) No. Petitioner Assessment Year Date of Impugned Order Tax * (In Rs.) Penalty * (In Rs.) Interest (In Rs.) 1 22371/23 Devi Traders 2017-18 25.5.23 8179930 8179930 - 2 22372/23 Devi Traders 2018-19 25.5.23 136906 136906 - 3 22933/23 Thapasi Rubbers 2017-18 24.5.23 2035004 1017502 - 4 22934/23 Thapasi Rubbers 2018-19 24.5.23 3906326 1953163 - 5 22935/23 Thapasi Rubbers 2019-20 24.5.23 561126 280564 - 6 22955/23 J.K.Global Traders 2017-18 2.12.22 649750 649750 - 7 22956/23 J.K.Global Traders 2018-19 2.12.22 267000 267000 - 8 22957/23 J.K.Global Traders 2019-20 30.12.22 1257212 1257212 - 9 23473/23 Alban Rubbers 2017-18 10.5.23 12895762 12895762 12451179 10 23474/23 Alban Rubbers 2018-19 10.5.23 16669208 16669208 13498209 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... double taxation. 7. As far as the movement of goods are concerned, it is submitted that the supplier had utilized their own vehicle to supply the goods to these petitioners and there are documents to substantiate that there was indeed delivery of goods to the respective petitioners. 8. On the other hand, the learned Additional Government Pleader for the respondent would submit that pursuant to the orders passed by this Court in W.P.(MD)No.2500 of 2021 etc. batch. On 24.02.2021, summons were issued to the said Charles, which was returned with an endorsement ''Expired'' and that the Department is therefore unable to comply with the order dated 24.02.2021 and therefore, benefit of the cross examination of Charles could not be extended to the respective petitioners. 9. It is submitted that burden of proof is on the petitioners to establish that the credit that was availed by them was valid and until such burden of proof is discharged by the respective petitioners, the credit availed by them is provisional and is liable to be reversed/recovered, if not paid, in the absence of any documents to substantiate the delivery of the goods. 10. It is submitted that admittedl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respective orders passed against them. The Writ Court by its order dated 24.02.2021 quashed the Impugned Orders and had remitted the case back to the respondent to pass a fresh order with a specific direction to extend the benefit of cross-examination of the said Charles and his wife Shanthi. Operative portion of the said order in Paragraph No.16 reads as under:- "16. Therefore, the impugned orders are quashed and the matters are remitted back to the file of the respondent. The stage upto the reception of reply from the petitioners herein will hold good. Enquiry alone will have to be held afresh. In the said enquiry, Charles and his wife Shanthi will have to be examined as witnesses. Parallely, the respondent will also initiate recovery action against Charles and his wife Shanthi." 18. In Paragraph No.15, the Writ Court did indicate that it was imperative that the respondent allowed cross-examination of the said Charles and his wife Shanthi by the respective petitioners, if it was the case of the respondent that there was no movement of goods to the petitioners from the three concerns of the said Charles and his wife Shanthi. 19. Paragraph No.15 from the decision of this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be borne in mind that the decision in W.P.(MD) Nos.2127, 2117, 2121, 2152, 2159, 2160, 2168, 2177, 2500, 2530, 2532, 2534, 2538, 2539, 2540, 2503 & 2504 of 2021 was rendered by the Court on 24.02.2020 in the earlier round of litigation. There, a reference was made to the decision of this Court rendered in Shri Vinayaka Agencies Vs. The Asst Commissioner, CT Vadapalani, 2013 60 VST 283, wherein, this Court had earlier held that the Commercial Tax Department does not have jurisdiction to reverse the input tax credit availed by on the ground that the selling dealer had not paid tax. In Paragraph No.8, the Writ Court in its order dated 24.02.2021 in the case of these petitioners had rightly concluded that the said decision in Shri Vinayaka Agencies Vs. The Asst Commissioner, CT Vadapalani, 2013 60 VST 283 may not apply to the facts of the case as it was rendered under the previous regime namely Tamil Nadu Value Added Tax Act, 2006. 26. It has to be also borne in mind that the Division Bench of this Court in a batch of Tax Cases, Writ Appeals in Tvl.Sahyadri Industries Limited Et cetera Vs. The State of Tamil Nadu Et cetera, 2023 (4) TMI 912; [2023] 115 GSTR 320 (Mad) has substantiall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate of Karnataka vs. M/s.Ecom Gill Coffee Trading Private Limited, dated 13.03.2023 in Civil Appeal. No. 230 of 2023. We shall deal with the same in due course of discussion. 102. The ratio in Sri Vinayaga Agencies vs. Assistant commissioner (CT), Vadapalani-I Assessment Circle, Chennai and Another, MANU/TN/1386/2013 : (2013) 60 VST 283 (Mad) cannot be applied in all cases. Likewise, the ratio in Jinsasan Distributors Vs. Commercial Tax Officer, Chennai, MANU/TN/1771/2012 : (2013) 59 VST 256, cannot be applied any longer in view of the recent decision of the Hon'ble Supreme Court in The State of Karnataka vs. M/s.Ecom Gill Coffee Trading Private Limited, dated 13.03.2023 in Civil Appeal. No. 230 of 2023. 103. While placing reliance on the aforesaid decision of the Hon'ble Supreme Court in State of Maharashtra Vs. Suresh Trading Company, MANU/SC/1740/1997 : (1997) 11 SCC 378, the Court in Jinsasan Distributors vs. Commercial Tax Officer, Chennai, MANU/TN/1771/2012 : (2013) 59 VST 256, failed to note the expression in Section 19(15) of the TNVAT Act, 2006 which specifically deals with the situation. Section 19(15) in the TN VAT Act, 2006 is an innovation which was not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respective counsels, despite sufficient lapse of time, since the case was reserved "for orders". 29. As far as generation of e-Way Bills are concerned, Notification No. 9/2018 dated 31.05.2018 reads as under:- ''In exercise of the powers conferred by clause (d) of sub-rule 14 of Rule 138 of the Tamil Nadu Goods and Services Tax Rules, 2017, Commissioner of State Tax, Tamil Nadu, hereby notifies that no e-way bill is required to be generated for the transport of following goods, for the values mentioned therein for intra-State movement i.e., within the State of Tamil Nadu: (a) Consignment with value of goods not exceeding Rupees One lakh. (b) The consignment of goods as listed out in the Annexure (serial No.1 to 100), irrespective of value of the consignment. 2. This notification shall come into effect from 02nd June, 2018.'' 30. The relevant provisions for availing Input Tax Credit under the provisions of the respective GST Enactments and the Rules made thereunder are under Section 16(2) of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017 and Section 16(2) of the Central Goods and Services Tax (CGST) Act, 2017. 31. Section 16(2) of the Tamil N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 16(2) of the respective GST enactments. It is a sine qua non for availing Input Tax Credit validly. The recipient has to be in possession of not only tax invoice or debit note issued by the registered supplier or such other taxpaying documents as may be prescribed but also documents to establish physical supply of goods and receipt of goods. 33. The expression "Supply" is defined in Section 7 of the respective GST enactments. For the sake of clarity, Section 7 of the Central Goods and Services Tax (CGST) Act, 2017 is reproduced below:- "7. Scope of supply. (1) For the purposes of this Act, the expression "supply" includes-- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business;1[and]; (c) the activities specified in Schedule I, made or agreed to be made without a consideration. (1A) Where certain activities or transactions constitute a supply in accordance with the provisions of sub section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services or both, but fails to pay to the supplier thereof the value of such supply along with the tax payable thereon within the time limit specified in the second proviso to sub-section (2) of section 16, shall furnish the details of such supply, the amount of value not paid and the amount of input tax credit availed of proportionate to such amount not paid to the supplier in FORM GSTR-2 for the month immediately following the period of one hundred and eighty days from the date of issue of invoice. Provided that the value of supplies made without consideration as specified in Schedule I of the said Act shall be deemed to have been paid for the purposes of the second proviso to sub-section (2) of section 16. (2) The amount of input tax credit referred to in sub-rule (1) shall be added to the output tax liability of the registered person for the month in which the details are furnished. (3) The registered person shall be liable to pay interest at the rate notified under sub-section (1) of section 50 for the period starting from the date of availing credit on such supplies till the date when the amount added to the output tax liability, as mentioned in sub-rule (2), is paid. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-rule (1) of rule 54. 46. Tax invoice.- Subject to rule 54, a tax invoice referred to in section 31 shall be issued by the registered person containing the following particulars, namely,- (a) name, address and Goods and Services Tax Identification Number of the supplier; (b) a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters- hyphen or dash and slash symbolised as --? and -/? respectively, and any combination thereof, unique for a financial year; (c) date of its issue; (d) name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient; (e) name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is unregistered and where the value of the taxable supply is fifty thousand rupees or more; (f) name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is un-registered and where the value of the taxable supply is less than fifty thousand rupees and the recipient requests that such det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the e-way bill electronically in FORM GST EWB-01 on the common portal after providing the necessary details in Part B of the form. 48. Rule 138 of the respective GST Rules has undergone minor changes during the period in dispute which is reproduced below:- "Rule 138. Information to be furnished prior to commencement of movement of goods and generation of e-way bill. - (1) Every registered person who causes movement of goods of consignment value exceeding fifty thousand rupees i. in relation to a supply; or ii. for reasons other than supply; or iii. due to inward supply from an unregistered person, shall, before commencement of such movement, furnish information relating to the said goods as specified in Part A of FORM GST EWB-01, electronically, on the common portal along with such other information as may be required on the common portal and a unique number will be generated on the said portal: Provided that the transporter, on an authorization received from the registered person, may furnish information in Part A of FORM GST EWB-01, electronically, on the common portal along with such other information as may be required on the common portal and a unique number wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or by air or vessel, the e-way bill shall be generated by the registered person, being the supplier or the recipient, who shall, either before or after the commencement of movement, furnish, on the common portal, the information in Part B of FORM GST EWB-01: Provided that where the goods are transported by railways, the railways shall not deliver the goods unless thee-way bill required under these rules is produced at the time of delivery. (3) Where the e-way bill is not generated under sub-rule (2) and the goods are handed over to a transporter for transportation by road, the registered person shall furnish the information relating to the transporter on the common portal and the e-way bill shall be generated by the transporter on the said portal on the basis of the information furnished by the registered person in Part A of FORM GST EWB-01: Provided that the registered person or, the transporter may, at his option, generate and carry the e-waybill even if the value of the consignment is less than fifty thousand rupees: Provided further that where the movement is caused by an unregistered person either in his own conveyance or a hired one or through a transporter, he or th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e updated in the e-way bill. (5A) The consignor or the recipient, who has furnished the information in Part A of FORM GST EWB-01, or the transporter, may assign the e-way bill number to another registered or enrolled transporter for updating the information in Part B of FORM GST EWB -01 for further movement of the consignment: Provided that after the details of the conveyance have been updated by the transporter in Part B of FORM GST EWB-01, the consignor or recipient, as the case may be, who has furnished the information in Part A of FORM GST EWB-01 shall Not be allowed to assign the e-way bill number to another transporter. (6) After e-way bill has been generated in accordance with the provisions of sub-rule (1), where multiple consignments are intended to be transported in one conveyance, the transporter may indicate the serial number of e-way bills generated in respect of each such consignment electronically on the common portal and a consolidated e-way bill in FORM GST EWB-02 maybe generated by him on the said common portal prior to the movement of goods. (7) Where the consignor or the consignee has Not generated the e-way bill in FORM GST EWB-01 and the aggregate of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 km One day in case of Over Dimensional Cargo [or multimodal shipment in which at least one leg involves transport by ship] 4 For every 20 km. or part thereof thereafter One additional day in case of Over Dimensional Cargo [or multimodal shipment in which at least one leg involves transport by ship]: Provided that the Commissioner may, on the recommendations of the Council, by Notification, extend the validity period of an e-way bill for certain categories of goods as may be specified therein: Provided further that where, under circumstances of an exceptional nature, including trans-shipment, the goods cannot be transported within the validity period of the e-way bill, the transporter may extend the validity period after updating the details in Part B of FORM GST EWB-01, if required. [Provided also that the validity of the e-way bill may be extended within eight hours from the time of its expiry.] Explanation 1. - For the purposes of this rule, the "relevant date" shall mean the date on which the e-way bill has been generated and the period of validity shall be counted from the time at which the e-way bill has been generated and each day shall be counted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt II, Section 3, Sub-section (i), vide number G.S.R 674 (E) dated the 28th June, 2017 as amended from time to time; (f) where the goods being transported are alcoholic liquor for human consumption, petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas or aviation turbine fuel; (g) where the supply of goods being transported is treated as No supply under Schedule III of the Act; (h) where the goods are being transported- (i) under customs bond from an inland container depot or a container freight station to a custom sport, airport, air cargo complex and land customs station, or from one customs station or customs port to another customs station or customs port, or (ii) under customs supervision or under customs seal; (i) where the goods being transported are transit cargo from or to Nepal or Bhutan; (j) where the goods being transported are exempt from tax under Notification No 7/2017-Central Tax(Rate), dated 28th June 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 679(E) dated the 28th June, 2017 as amended from time to time and Notification No 26/2017 Central Tax (Rate) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption is confined to transportation of goods not exceeding Rs.1,00,000/- and only for those goods specified in the Annexure to the said notification. A reading of the Annexure to the above notification indicates that "rubber" or "rubber sheets" are not specified in Serial Nos.1-100 to the Annexure to the above notification. 52. Rule 138A of the respective GST Rules of 2017 deal with the documents and devices to be carried by a person-in-charge of the conveyance. Rule 138A of the respective GST Rules of 2017 has also undergone few changes. Rule 138A and 55A of the respective GST Rules of 2017 reads as under:- 138A. Documents and devices to be carried by a person-in-charge of a conveyance.- Rule 55A- Tax Invoice or bill of supply to accompany transport of goods:- (1) The person in charge of a conveyance shall carry - (a) the invoice or bill of supply or delivery challan, as the case may be; and (b) a copy of the e-way bill in physical form or the e-way bill number in electronic form or mapped to a Radio Frequency Identification Device embedded on to the conveyance in such manner as may be notified by the Commissioner. The person-in-charge of the conveyance shall carry a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use being shown, extend the time for recording of the final report in Part B of FORM EWB-03, for a further period not exceeding three days. Explanation.- The period of twenty four hours or, as the case may be, three days shall be counted from the midnight of the date on which the vehicle was intercepted. (2) Where the physical verification of goods being transported on any conveyance has been done during transit at one place within the State or Union territory or in any other State or Union territory, no further physical verification of the said conveyance shall be carried out again in the State or Union territory, unless a specific information relating to evasion of tax is made available subsequently. 55. If there is a failure to carry the documents, the goods are liable for seizure and confiscation and proceedings under Section 129 of the respective GST enactments can be initiated against such transporter or owner of conveyance. Section 129 of the respective GST enactments reads as under:- "129. Detention, seizure and release of goods and conveyances in transit. (1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in nature or are likely to depreciate in value with passage of time, the said period of seven days may be reduced by the proper officer." 56. Further, Rule 56 in Chapter VII of the respective GST Rules of 2017 contemplates maintenance of accounts by a "registered person". As per Rule 56 in Chapter VII of the respective GST Rules of 2017, every registered person has to maintain in addition to the particulars specified in Sub-Section (1) of Section 35, a true and up-to date record of goods and services imported or exported, as well as supplies subject to tax under reverse charge. This includes keeping relevant documents such as invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers and refund vouchers. The expression "relevant documents" will include "e-way Bills". Rule 56 in Chapter VII of the respective GST Rules of 2017 will apply to both the supplier and the recipient. Rule 56 in Chapter VII of the respective Rules reads as under:- "Rule 56 - Maintenance of accounts by registered persons: (1) Every registered person shall keep and maintain, in addition to the particulars mentioned in sub-section (1) of section 35, a true ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onic device. (8) Any entry in registers, accounts and documents shall not be erased, effaced or overwritten, and all incorrect entries, otherwise than those of clerical nature, shall be scored out under attestation and thereafter the correct entry shall be recorded and where the registers and other documents are maintained electronically, a log of every entry edited or deleted shall be maintained. (9) Each volume of books of account maintained manually by the registered person shall be serially numbered. (10) Unless proved otherwise, if any documents, registers, or any books of account belonging to a registered person are found at any premises other than those mentioned in the certificate of registration, they shall be presumed to be maintained by the said registered person. (11) Every agent referred to in clause (5) of section 2 shall maintain accounts depicting the, (a)particulars of authorisation received by him from each principal to receive or supply goods or services on behalf of such principal separately; (b)particulars including description, value and quantity (wherever applicable) of goods or services received on behalf of every principal; (c) particulars inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such registered person and shall produce the details thereof as and when required by the proper officer. (18) Every registered person shall, on demand, produce the books of accounts which he is required to maintain under any law for the time being in force." 57. Thus, these petitioners as recipients of goods were also required to maintain all documents in addition to invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers and refund vouchers, etc., e-Way Bills as well. 58. Both the suppliers and respective petitioners were required to have maintained proper books of account including e-Way Bill to justify availment of credit on the strength of the document prescribed under Section 16(2) of the respective GST Enactments, 2017 read with Rule 138 of the respective GST Rules, 2017. 59. None of the petitioners are in possession of any e-Way Bill as is contemplated under the provisions of the respective GST enactments and the Rules made thereunder. 60. Although cross-examination of the said Charles and his wife Shanthi has not been allowed, it is to be noted that the credit that is claimed under the provisions of the respective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tantiate movement of goods. That apart, it appears that the entire value of tax liability was discharged by the suppliers from and out of ineligible Input Tax Credit to facilitate availing of such ineligible credit by the petitioners to defeat the very purpose of allowing Input Tax Credit under the provisions of the respective GST Enactments of 2017. It was also contrary to Rules. 68. Under the provisions of the respective GST enactments and the Rules made thereunder, burden is on the recipient to show that the goods were indeed received. In these cases, admittedly, there are no documents to show that the goods had been received and accompanied e-Way bill. Without discharging the burden, the credit that was granted has to be treated as provisional and has to be paid back. This is the ratio of the Hon'ble Supreme Court also in State of Karnataka Vs. Ecom Gill Coffee Trading Private Limited, 2023 SCC OnLine SC 248. The said decision was rendered in the context of Section 70 of the Karnataka Value Added Tax Act, 2003. In Paragraph No.9.1, the Hon'ble Supreme Court has observed as under:- "9.1. Thus, the provisions of Section 70, quoted herein above, in its plain terms ..... X X X X Extracts X X X X X X X X Extracts X X X X
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