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IN THE HIGH COURT OF ALLAHABAD
SUBHASH VIDYARTHI J.
M/s Rajshi Processors, Raebareli Having Office Thru. Its Partner Ashok Kumar Lakhotia – Appellant
Versus
State Of Uttar Pradesh Thru. Prin. Secy. Deptt. Of State Tax Govt. Lko. And 2 Others – Respondent
Civil Misc Review Application No. - 69 of 2024
Decided on : 24-05-2024
REVIEW - INPUT TAX CREDIT - GST Act, 2017, Section 16; CPC, Order 47, Rule 1 - The court discussed Section 16 of the GST Act, 2017, which stipulates that input tax credit can only be claimed if the goods have been received. The court emphasized that mere possession of documents does not suffice if the underlying transactions are fraudulent. The interpretation of these provisions led to the conclusion that the petitioner was not entitled to input tax credit due to the non-existence of the supplier firms, thus affirming the penalties imposed.
Fact of the Case:
The petitioner, engaged in manufacturing aluminum parts, claimed input tax credit (I.T.C.) based on invoices from three firms later found to be non-existent. Following a survey by the Special Investigation Branch, it was determined that the petitioner fraudulently claimed I.T.C. without actual supply of goods.
Finding of the Court:
The court found that the petitioner failed to substantiate claims of receiving goods from the alleged suppliers, which were determined to be bogus. The court upheld the decision of the adjudicating authority and the appellate authority, confirming the denial of I.T.C. and the imposition of penalties.
Issues: Whether the petitioner was entitled to input tax credit despite the subsequent discovery that the supplier firms were non-existent and whether the review petition presented valid grounds for reconsideration of the earlier judgment.
Ratio Decidendi: The court held that under Section 16(2)(b) of the GST Act, actual receipt of goods is a prerequisite for claiming input tax credit. The existence of valid documentation does not override the requirement of actual supply, especially in cases of fraud. The court also reiterated that a review petition must demonstrate an error apparent on the face of the record, which was not established in this case.
Final Decision: The review petition was dismissed, affirming the previous judgment that denied the petitioner input tax credit due to fraudulent claims.
JUDGMENT :
Hon’ble Subhash Vidyarthi J.
1. Heard Shri Pranjal Shukla, learned counsel for the review petitioner.
2. By means of the instant review petition, the petitioner is seeking review of a judgment and order dated 14.05.2024 passed by this Court in Writ Tax No.128 of 2024.
3. The petitioner is engaged in manufacture and sale of Aluminum Casting & Machinery Parts. The petitioner had filed GSTR 3B for the months of May, 2019, August, 2019 and December, 2019. The Deputy Commissioner, Special Investigation Branch, Commercial Tax, Lucknow had conducted a survey of the place of business on 25.02.2020. The petitioner claimed to have received inward supplies worth Rs.16,39,200/-from M/s Ridhi Sidhi Enterprises, worth Rs. 17,25,160/-from M/s Siddhartha Trading Company and worth Rs. 29,78,025/-from M/s Satvik Enterprises and claimed Rs.2,95,056/-, Rs.2,63,160/-and Rs. 4,54,275/-respectively towards I.T.C. Claim for inward supplies received from the aforesaid firms. Special Investigation Branch, Agra conducted a survey of the aforesaid three firms whereupon it came to light that all the aforesaid three firms were non-existent and bogus firms and the petitioner had fraudulently claimed I.T.C. benefit of Rs.10,12,491/-without any actual supply of goods, on the basis of the fake invoice issued by the aforesaid three non-existence bogus firms. The Special Investigation Branch found that the petitioner had knowingly claimed excessive amount towards I.T.C. in his GSTR-2A also and had adjusted the same in the tax payable by him. Thus, the petitioner claimed a total of Rs. 15,93,491/- I.T.C. in violation of the provisions of law.
4. The adjudicating authority issued a notice under Section 74 in reply to which the petitioner submitted his explanation alongwith the evidence, stating that it had received inward supplies from M/s Ridhi Sidhi Enterprises, M/s Siddhartha Trading Company and M/s Satvik Enterprises and in support of its claim of actual receipt of inward supplies, the petitioner had submitted invoices, copies of GR (goods receipts), e-way bill, ledger and bank statements of the firms, evidence of transaction of amounts through RTGS and evidence of physical receipts of goods. The inward supplies received by the petitioner were entered in the stock register.
5. The adjudicating authority did not accept the explanation of the petitioner because the Special Investigation Branch, Agra had found the aforesaid three firms, namely, M/s Ridhi Sidhi Enterprises, M/s Siddhartha Trading Company and M/s Satvik Enterprises to be nonexistent and bogus and that the tax invoices had been issued without any actual supply of goods upon which the petitioner had fraudulently taken benefit of I.T.C. The adjudicating authority declined the benefit of I.T.C. to the petitioner and imposed penalty on the petitioner and fixed the liability of interest also.
6. The appellate authority found that in his explanation submitted before the adjudicating authority, the petitioner had produced GR No. 213/dated 13.05.2019, 694/dated 21.08.2019, 695/dated 21.08.2019 and 1363/dated 15.12.2019 issued by M/s Goyal Goods Carry Corporation, Daresi No. 2, Agra as evidence for transport of goods from Agra to Raebareli. The adjudicating authority found that GR No. 213/dated 13.05.2019 and 1363/dated 15.12.2019 had been issued on a similar format, whereas GR No. 694/dated 21.08.2019 and 696/dated 21.08.2019 had been issued on a different format, whereas all of those have been issued by the same transport company and, which had no other branch. The GSTIN-09AJBPG5336KIZ5 and phone number 6395078684 were mentioned on the transport bilty. GST is payable on transport services. When an enquiry was conducted on the basis of GSTIN number mentioned on the transport bilty, the GSTIN was found to be not valid as per the information available on the common portal. The phone number mentioned on the transport bilty, was found to be in use of some lady at Kasganj. From the aforesaid facts, it appear
Input tax credit under the GST Act requires actual receipt of goods; mere documentation is insufficient if the underlying transactions are fraudulent.
A registered person is not entitled to input tax credit if the claimed supplies are from non-existent firms, regardless of the validity of the supplier's GST registration at the time of transaction.
Section 263 revision invalid where AO conducted adequate enquiry into purchases and applied mind; PCIT cannot substitute view merely deeming enquiry inadequate without specific error.
The power of review is limited to correcting apparent errors on the record and cannot be used to rehash arguments or findings that have been previously settled.
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