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IN THE HIGH COURT OF JUDICATURE AT MADRAS
C. SARAVANAN, J.
Tvl.R.M.K.Enterprises, Represented by its Proprietor Mr. R. Malik - Petitioner
Versus
The State Tax Officer, Central Intelligence Cell, Intelligence – II, Chennai & Ors. - Respondents
W.P.Nos.10966, 10968 and 10973 of 2021 and W.M.P.Nos.11597, 11599 and 11600 of 2021
Decided On : 02-01-2025
| Table of Content |
|---|
| 1. overview of assessment orders and transactions (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. arguments regarding input tax credit eligibility (Para 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14) |
| 3. court's reasoning on the legal standards (Para 16 , 18) |
| 4. established ratio for cgst applicability (Para 17) |
| 5. final dismissal of writ petitions (Para 19 , 20) |
ORDER :
The petitioner is before this Court against the respective Assessment Orders all dated 03.02.2021 confirming the demand of GST for the Assessment Years 2017-2018, 2018-2019, 2019-2020.
2. The petitioner appears to be a dealer in scrap steel and had transactions with the following dealers during the respective Assessment Years:
| Sl.No. | Assessment Years | Dealer's Name |
| 1 | 2017-2018 | Tvl.R.R.Trading |
| 2 | 2018-2019 | Tvl.Asian Steels |
| 3 | 2019-2020 | Tvl.Lucky Scrap Traders |
3. Details of the credit availed by the petitioner from different dealers are as under:-
| Sl.No. | W.P.Nos and Assessment Years | Name and GSTIN (As per impugned order) | ITC Availed |
| 1 | W.P.No.10966 of 2021 (2017-2018) | 1. Tvl.RR Trading & Co (33EDYPS0948Q1ZC) | Rs.75,44,264/- |
| 2. Tvl.Asian Steel Traders (33AMDPS4215Q1ZQ) | Rs.13,38,994/- | ||
| 3. Tvl.Lucky Scrap Traders (33BKXPA5853M1ZL) | Rs.7,28,200/- | ||
| 2 | W.P.No.10968 of 2021 (2018-2019) | 1. Tvl.RR Trading & Co (33EDYPS0948Q1ZC) | Rs.59,68,106/- |
| 2. Thangam Steel (33FRRPS2935B1ZL) | Rs.41,21,864/- | ||
| 3. Asian Steel (33AMDPS4215Q1ZQ) | Rs.83,38,560/- | ||
| 4. Gayathri traders (33BBTPA4294F1ZM) | Rs.7,63,272/- | ||
| 5. Steel World (33BGMPA9161P1ZY) | Rs.3,21,304/- | ||
| 6. Sun Steel (33BHDPP5225K1ZB) | Rs.1,07,060/- | ||
| 7. Aarthi Enterprises (33BRDPG6857J1ZL) | Rs.1,58,148/- | ||
| 8. Thirumalai Trading (33DFMPM5137L1Z2) | Rs.58,374/- | ||
| 9. Sree Sathya Traders (33DVIPP1053C2ZX) | Rs.91,700/- | ||
| 3. | W.P.No.10973 of 2021 (2019-2020) | 1. Tvl.RR Trading & CO (33EDYPS0948Q1ZC) | Rs.1,16,082/- |
| 2. Thangam Steel (33FRRPS2935B1ZL) | Rs.26,44,134/- | ||
| 3. Asian Steel (33AMDPS4215Q1ZQ) | Rs.19,47,576/- | ||
| 4. Kavery Enterprises (33ABCPE4076B3ZA) | Rs.1,90,232/- |
4. The case of the respondents Department appears to be that petitioner had transactions with non-existing dealers who merely passed an ineligible credit and that none of the suppliers had paid any GST in cash and were part of a larger clique who had indulged in passing ineligible credit which has been sought to be denied by the respondents Department in the impugned order.
5. The fact remains that earlier summons were issued by the Central Authority under Section 70 of the Central Goods and Services Tax (CGST) Act, 2017, although the petitioner is assessed to the respondents State Authorities.
6. Subsequently, statements were recorded from the petitioner and the Show Cause Notices were issued for the respective Assessment Years seeking to deny the Input Tax Credit availed by the petitioner on the strength of invoices raised by the above mentioned dealers on the petitioner who were not in existence.
7. In these writ petitions, the learned counsel for the petitioner submits that the petitioner has made payment in cash / cheques to the respective dealers who had encashed the cheques issued by the petitioner and therefore there is no justification in imposing tax liability on the petitioner by asking the petitioner to reverse the Input Tax Credit, merely because, it is perception of the respondents Department that the above mentioned dealers have resorted to circular trading.
8. In support of these writ petitions, the learned counsel for the petitioner had produced copies of invoices and the returns downloaded by the petitioner in Form GSTR-2A, by virtue of which, the petitioner was eligible to avail Input Tax Credit in the GST borne by the petitioner for the respective Assessment Years.
9. It is submitted that the 1st respondent / State Tax Officer alleged that these suppliers are bill traders and hence the Input Tax Credit availed by the petitioner on the strength of tax invoice is ineligible. It is submitted that the petitioner filed tax invoice, e-way bill, Bank Statements and GSTR-2A returns. However, none of the documents were appreciated by the respondents. It is submitted that the re
AI
Input Tax Credit claims cannot be denied without adequate evidence and consideration of the principles of natural justice as established in the Central Goods and Services Tax Act.
Dealers claiming input tax credit must establish genuine transactions and physical movement of goods with adequate proof; failure to do so may result in disallowance and recovery proceedings under th....
Input Tax Credit requires valid documentation proving the physical movement of goods; the burden of proof lies with the assessee to substantiate claims, and penalties are subject to careful assessmen....
The burden of proof lies with the dealer to establish the genuineness of transactions and actual movement of goods for Input Tax Credit claims under GST.
Assessment order under GST S.74 set aside for fresh consideration due to disputed supplier existence and documents.
Merely pleading ignorance or lack of responsibility does not absolve a party from proving input tax credit claims when asked.
The first respondent was not justified in reversing the ITC availed by the appellant without conducting any enquiry on the supplier and without resorting to any action against the supplier.
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