Petitioner must substantiate claims of timely payments for input tax credit; authority's findings upheld due to lack of evidence.

JUDGMENT :

Raja Basu Chowdhury, J. 

1. The present writ petition has been filed inter alia challenging the order dated 29th January, 2025 issued under Section 74 of the WBGST/CST Act, 2017 (hereinafter referred to as the “said Act”) in respect of the tax period July 2017 to March 2022. Records would reveal that on the basis of an audit observation under Section 65 of the said Act, a proceeding under Section 74 was initiated by issuing a notice dated 1^st August, 2024 in the Form DRC-01. From the show cause it would transpire that the proposed demand has been made on the following heads:-

“2.1. Irregular availment of ITC contravening the provisions of Section 16 of CGST Act, 2017 as the supplier did not file GSTR-3B return:

2.2. Irregular availement of ITC (Block Credit) against the invoices related to purchase/repair and maintenance of motor vehicles in violation of Section 17 (5) of CGST Act, 2017:-

2.3. Irregular availment of ineligible credit in violation of Section 16 (1) & 16(2) of CGST Act, 2017:

2.4. Excess availment of ITC in GSTR-3B in comparison to GSTR-2A violating the provisions of Section 20 of the IGST Act, 2017:

2.5. Non-payment of GST on the supplies received from unregistered supplies under RCM:

2.6. Non-payment of GST on GTA services & Legal services received under RCM:

2.7. Non-payment of GST [GSTR-9 vis-à-vis Profit and Loss Account]

2.8. Irregular availment of ITC due to non-payment of value of supply along with tax to the Sundry Creditors within a period of 180 days violating the provision of Section 16 (2) of the CGST Act, 2017:

2.9. Short-payment of RCM as reflected in GSTR-2A: 2.10. Non-payment of tax [GSTR-9 vis-à-vis GSTR-9c]

2.11. General Penalty under Section 125 of the CGST Act, 2017 read with SGST Act, 2017”

2. Mr. Saraf, learned Advocate representing the petitioner has, however, pointed out that the petitioner confines the challenge only in respect of the paragraphs 2.2, 2.3, 2.4 and 2.8 of the above show cause. Since, according to Mr. Saraf, the show cause has been initiated on the basis of the audit observations, he had drawn attention of the Court to the audit observations especially in relation to the non- payment of tax to sundry creditors and would submit that the respondents had in the most irregular manner purported to treat the outstandings shown against sundry creditors in the balance- sheet/profit and loss account of the petitioner as amounts which have remained outstanding for more than 180 days, in order to attract the second proviso of Section 16 (2) of the said Act, though there being no basis for the same.

3. According to Mr. Saraf, the reflection of the figure against the head of the sundry creditor in the balance sheet/profit and loss account of the petitioner cannot tantamount to an outstanding amount of the sundry creditor beyond 180 days. In the instant case, on the basis of the disclosure made by the petitioner, according to him, except for one particular creditor, namely Unique Safety, there are no other sundry creditors in respect whereof, payment had been made beyond 180 days from the date of the invoices being raised. Although, such fact was duly notified to the auditors, the respondents by ignoring the same have caused the show cause to be issued. Despite the fact that the petitioner had clarified its position once again, in the response to the show cause and though, the proper officer in paragraph 9.9.3 of the adjudication order has taken note of such response, such response appears to have been brushed aside on the ground that the proof of payment by way o