Due to a lack of evidence, Allahabad HC upholds the denial of an input tax credit
Fact and issue of the case
Heard Mr. Pradeep Kumar Srivastava for the petitioner and Mr. Rishi Kumar, learned Additional Chief Standing Counsel for the respondents.
The instant Writ Tax is being entertained by this Court in view of the fact that G.S.T. Tribunal is not functional in the State of Uttar Pradesh pursuant to the Gazette notification of the Central Government bearing number CG-DL-E-14092023-248743 dated 14.09.2023.
By means of this writ petition, the petitioner is assailing the order dated 4.10.2019 passed by the Commercial Tax Officer, Sector 2 Meerut by which the proceedings of Section 74 of UP GST Act was initiated demanding Rs. 12,32,148/- as wrong availment of input tax credit which was confirmed by the impugned order dated 6.3.2021 passed by Additional Commissioner, Grade – 2 (Appeal) First, Commercial Tax, Meerut.
Brief facts of the case as stated, are that the petitioner being a registered dealer having GSTIN No. 09ACLPU9404D1ZA is engaged in the purchase and sale of waste materials, plastic scrap, paper scrap and metal scrap. The petitioner from April 2018 to September 2019 has disclosed the turnover of Rs. 34,22,634/- on which input tax credit of Rs. 6,16,074.12/-was availed. Thereafter a show cause notice was issued on 23.1.2019 under Section 74 of UP GST Act on the ground of wrong availment of input tax credit to which a reply was submitted by the petitioner. Being not satisfied with the reply of the petitioner, tax liability to the tune of Rs. 6,16,074/- along with penalty of Rs. 6,16,074/- total amount Rs. 12,32,148/- was demanded from the petitioner by the order dated 4.10.2019. Thereafter an appeal has been preferred which has been rejected by the impugned order dated 6.3.2021. Hence the present writ petition.
Learned counsel for the petitioner has submitted that petitioner has purchased the goods / scrap from various parties through tax invoices for which e-way bills were also generated. The said goods were transported through trucks along with bilties and payments were made through cheques or RTGS / NEFT. On the basis of selling dealer having not shown the said purchases in its return or not deposited tax, the action cannot be taken against the petitioner. He further submitted that if the selling dealer have not paid the tax / deposited the tax with the Government, the benefit of input tax credit cannot be denied to the petitioner.
Observation of the court
Similarly, this Court in the case of the Commissioner Commercial Tax Vs. M/s Ramway Foods Ltd. (supra) has held that the primary responsibility of claiming the benefit is upon the dealer to prove and establish the actual physical movement of goods, genuineness of transactions, etc. and if the dealer fails to prove the actual physical movement of goods, the benefit cannot be granted.
The judgement relied upon by the counsel for the petitioner of Calcutta High Court in the cases of M/s LGW Industries Limited and others (supra) and Sanchita Kundu and another (supra) is of no aid to the petitioner as recently Hon’ble the Apex Court in the case of M/s Ecom Gill Coffee Trading Private Limited (supra) has specifically held that onus is to be discharged by the petitioner to prove and establish beyond doubt the actual transaction and physical movement of goods. But in the case in hand, the petitioner has failed to prove and establish actual physical movement of goods and genuineness of transaction as such the proceedings has rightly been initiated.
Further, the case law relied upon by the counsel for the petitioner of this Court in Ashish Trading Company (supra) is also of no aid to the petitioner as in that case in para 14, the Court has recorded a finding of fact that order of the first appellate authority is cryptic as no details were provided. But the facts of the present case is different as stated in previous paras and recent judgement of Apex Court in the case of Ecom Gill Coffee Tradiving Pvt. Ltd. (supra) is squarely applicable in the facts of the present case.
In view of the facts as stated above, no interference is called for by this Court in the impugned orders. The writ petition fails and is dismissed accordingly.
Read the full order from hereMalik-Traders-Vs-State-of-U.P.-Allahabad-High-Court2