Case Note & Summary
The petitioner, a proprietorship firm engaged in exporting mobile handsets and registered under the CGST Act, 2017, filed applications for refund of Input Tax Credit (ITC) on export of goods. The Department issued a show cause notice alleging that the petitioner had wrongly availed ITC without receipt of goods and without payment to the supplier. The petitioner's registration was cancelled, and an order-in-original was passed demanding Rs.1,01,02,741/- along with interest and penalty under Sections 16(2), 50, 122(1) read with 74, and 125 of the CGST Act. The appellate authority upheld the order and rejected the application for revocation of cancellation. The petitioner challenged these orders by way of a writ petition under Article 226 of the Constitution. The Court examined the evidence, including invoices, bank statements, and the supplier's statement, and found that the petitioner failed to prove actual receipt of goods and payment to the supplier. The Court held that the burden of proof under Section 16(2) lies on the claimant of ITC, and the petitioner did not discharge it. Consequently, the demand was upheld, and the rejection of revocation of registration was affirmed. The writ petition was dismissed.
Headnote
A) Goods and Services Tax - Input Tax Credit - Section 16(2) of CGST Act, 2017 - Burden of Proof - The claimant of ITC must prove receipt of goods and payment to the supplier; mere invoices and bank statements are insufficient. The Court held that the petitioner failed to discharge its burden, and the demand was upheld. (Paras 1-20)
B) Goods and Services Tax - Revocation of Cancellation of Registration - Natural Justice - The appellate authority's rejection of revocation was upheld as the petitioner did not comply with conditions for revocation and the underlying demand was valid. (Paras 1-20)
C) Goods and Services Tax - Appeal - Pre-deposit - Section 107(6) of CGST Act, 2017 - The appellate authority's requirement of pre-deposit was not challenged; the appeal was dismissed on merits. (Paras 1-20)
Issue of Consideration
Whether the petitioner is entitled to revocation of cancellation of GST registration and whether the demand for reversal of Input Tax Credit along with interest and penalty is sustainable when the petitioner failed to prove receipt of goods and payment to the supplier.
Final Decision
The writ petition is dismissed. The order-in-appeal dated 17th June 2022 and the order-in-original are upheld. No order as to costs.
Law Points
- Input Tax Credit
- Section 16(2) CGST Act
- burden of proof on claimant
- revocation of cancellation of registration
- natural justice
- pre-deposit for appeal
Case Details
2023 LawText (BOM) (08) 120
WRIT PETITION (L) NO.25142 OF 2022
G. S. Kulkarni, Jitendra Jain
Mr. Bharat Raichandani a/w. Mr. Prathamesh Gorgate i/by M/s. U.B.R. Legal Advocates for the Petitioner, Mr. Jitendra B. Mishra a/w. Mr. Dhananjay B. Deshmukh and Mr. Ashutosh Mishra for the Respondents
Union of India, State of Maharashtra, Commissioner of CGST & C. Ex, Appeal-I, Joint Commissioner, Deputy Commissioner, Assistant Commissioner, Superintendent
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Nature of Litigation
Writ petition under Article 226 of the Constitution challenging order-in-appeal upholding rejection of revocation of GST registration and confirming demand for reversal of Input Tax Credit with interest and penalty.
Remedy Sought
Petitioner sought quashing of the order-in-appeal dated 17th June 2022 and restoration of GST registration.
Filing Reason
Petitioner's GST registration was cancelled and demand was raised for wrongful availment of Input Tax Credit; appellate authority upheld the orders.
Previous Decisions
Order-in-original dated 31st March 2021 raising demand of Rs.1,01,02,741/- and cancelling registration; order-in-appeal dated 17th June 2022 upholding the same.
Issues
Whether the petitioner is entitled to revocation of cancellation of GST registration?
Whether the demand for reversal of Input Tax Credit along with interest and penalty is sustainable?
Submissions/Arguments
Petitioner argued that it had valid invoices and bank statements proving payment to the supplier, and that the supplier had confirmed receipt of payment.
Respondents argued that the petitioner failed to prove actual receipt of goods and that the supplier's statement indicated no such supply; burden of proof under Section 16(2) was not discharged.
Ratio Decidendi
Under Section 16(2) of the CGST Act, 2017, the burden of proving receipt of goods and payment to the supplier lies on the claimant of Input Tax Credit. Mere production of invoices and bank statements is insufficient; the claimant must establish actual receipt of goods. Failure to do so justifies denial of ITC and imposition of demand, interest, and penalty.
Judgment Excerpts
The Petitioner has challenged the Order In Appeal (O-I-A) passed by the Commissioner of Goods and Service Tax and C Ex. [Commissioner (Appeal)], dated 17th June 2022, whereby, the Appellate Authority has upheld the order of rejection of application for revocation of cancellation of registration of the Petitioner and also has upheld Order-In-Original (O-I-O) raising a demand of Rs.1,01,02,741/- for contravention of provisions of Section 16(2) of the CGST Act and further levy of interest under section 50 of the Act and imposition of penalty under Section 122(1) read with section 74 of the CGST Act, 2017 and section 125 of the CGST Act, 2017.
Procedural History
The petitioner filed applications for refund of ITC on 10th April 2020 and 24th February 2020. Show cause notice was issued. Order-in-original dated 31st March 2021 cancelled registration and raised demand. Appeal to Commissioner (Appeal) was dismissed on 17th June 2022. Writ petition filed under Article 226.
Acts & Sections
- Central Goods and Services Tax Act, 2017: 16(2), 50, 74, 107(6), 122(1), 125
