Case Note & Summary
The petitioner, M/s. Akal Trade Links, a partnership firm represented by its partner Sri R. Sangar Ganesh, filed a writ petition under Article 226 of the Constitution of India before the Madras High Court challenging an order dated 28.04.2023 passed by the Assistant Commissioner (ST), Kangeyam Assessment Circle. The impugned order confirmed a tax proposal against the petitioner for wrongful availment of Input Tax Credit (ITC) in respect of purchases made from Eco-friendly Coco Products during the Assessment Year 2018-2019. The petitioner contended that at the time of delivery of goods, the supplier's GST registration had not been cancelled, the supplies were supported by tax invoices containing vehicle numbers for transportation, and the supplier had filed returns and paid the requisite taxes. The respondent argued that the burden of proof under Section 155 read with Section 16 of the GST statutes was on the petitioner, who failed to provide evidence of actual movement of goods such as lorry receipts and weighment slips. The court noted that the impugned order referred to eight invoices issued between January 2018 and August 2018, and the supplier was registered during the relevant period. The petitioner had included invoices in the paper book, each containing the vehicle number. The court observed that the impugned order recorded the petitioner's contention that the supplier arranged conveyance, and in view of this, further examination regarding the genuineness of supply was warranted, especially since the supplier had filed returns and paid taxes. Without undertaking such examination, the tax proposal was confirmed merely on the ground that lorry receipts and weighment slips were not filed. The court held that the impugned order could not be sustained and required reconsideration. Accordingly, the court set aside the order dated 28.04.2023 and remanded the matter to the respondent for fresh consideration. The petitioner was permitted to place additional documents within 15 days, and the respondent was directed to pass a fresh order within 3 months after providing a reasonable opportunity of hearing. The writ petition was disposed of with no order as to costs, and connected miscellaneous petitions were closed.
Headnote
A) Goods and Services Tax - Input Tax Credit - Burden of Proof - Section 155 read with Section 16 of the Tamil Nadu Goods and Services Tax Act, 2017 - The burden of proof for availment of ITC is on the person availing ITC. However, when the petitioner produced invoices containing vehicle numbers and the supplier had filed returns and paid taxes, the respondent ought to have conducted further examination regarding the genuineness of supply before confirming the tax proposal. (Paras 2-5) B) Goods and Services Tax - Natural Justice - Remand - The impugned order was set aside and the matter remanded to the respondent for reconsideration, permitting the petitioner to place additional documents within 15 days, and directing the respondent to pass a fresh order within 3 months after providing a reasonable opportunity of hearing. (Paras 6-7)
Issue of Consideration
Whether the impugned order confirming the tax proposal for wrongful availment of Input Tax Credit (ITC) was sustainable when the petitioner had produced invoices with vehicle numbers and the supplier had filed returns and paid taxes, but the respondent did not conduct further examination regarding the genuineness of supply.
Final Decision
The impugned order dated 28.04.2023 is set aside and the matter is remanded to the respondent for reconsideration. The petitioner is permitted to place additional documents within 15 days, and the respondent shall pass a fresh order within 3 months after providing a reasonable opportunity of hearing. The writ petition is disposed of with no order as to costs. Connected miscellaneous petitions are closed.
Law Points
- Burden of proof for ITC availment
- Genuineness of supply
- Requirement of proper inquiry before confirming tax proposal
