Input tax credit claims require proof of actual tax payment by the supplier; failure to demonstrate this results in denial of credit.

JUDGMENT :

Rohit Ranjan Agarwal, J.

1. Petitioner, before this Court, is a registered dealer under U.P. Goods and Services Tax Act, 2017 (hereinafter referred as “U.P. GST, 2017”). It is engaged in providing soil testing services for preparation of soil health guard to Government of U.P.

2. Petitioner made purchase of what-man filter paper required for soil testing from one Shree Radhey International, Delhi, who at the time when the sale was made was also a registered dealer. According to petitioner, payment for entire purchase so made was through the banking channel from March to April, 2018. The goods purchased were against tax invoices and it was declared by petitioner in its GSTR-3B return for the period in question. Input tax credit on output tax liability was claimed and for input tax credit, credit was availed.

3. A show-cause notice dated 06.09.2021 was issued for financial year 2017-18 by Assistant Commissioner, State Tax, Block-3, Jhansi under Section 74(1) of the Act of 2017. A reply was submitted on 05.10.2021, thereafter, an order under Section 74(9) was passed demanding tax/interest and penalty on 17.12.2021. The order was subjected to appeal by petitioner before Additional Commissioner, Grade-II (Appeal) IInd, Commercial Tax, Jhansi who dismissed the same on 20.12.2022. Hence, this writ petition.

4. Ms. Pooja Talwar, counsel for petitioner submitted that when the transaction had taken place and the goods were purchased from the supplier firm Shree Radhey International, which was a registered firm under the Act, all the payments were made through RTGS and filter paper so purchased was brought in the car of petitioner itself and no help of outside transportation was taken up. The registration of Shree Radhey International was cancelled on 11.09.2019 while the transaction had taken place between March and April, 2018. According to her, necessary documents for claiming ITC were provided pursuant to which the benefit was accorded and there stood no occasion for reversing the ITC availed by the petitioner. It is the fault of the supplier firm who had not deposited the tax so calculated and not of the recipient firm.

5. She has relied upon a decision of co-ordinate Bench of this Court in case of M/s Solvi Enterprises vs. Additional Commissioner Grade II and another, Writ Tax No. 1287 of 2024, decided on 24.03.2025 and judgment of Division Bench of Calcutta High Court rendered in case of Suncraft Energy Private Limited and another vs. The Assistant Commissioner, State Tax, MAT 1218 of 2023, decided on 02.08.2023. She has also relied upon an interim order granted by Division Bench of this Court in case of Rimjhim Ispat Ltd. vs. Union of India and others , Writ Tax No. 1611 of 2022 on 30.01.2023, wherein a show-cause notice issued to assessee was stayed on the ground that vires of Section 16(2)(c) of Central Goods and Services Tax Act, 2017 (hereinafter referred as “the Central Act, 2017”) was under challenge.

6. Reliance has also been placed upon judgment of Division Bench of this Court in case of Ajnara Realtech Limited vs. Sate of U.P. and 3 others, 2025 NTN (Vol. 87) 521 and Commissioner of Central Excise, Customs & Service Tax vs. Juhi Alloys Ltd., 2014 (302) ELT 487 judgment of Madras High Court in case of M/s D. Y. Beathel Enterprises vs. State Tax Officer, W.P. (MD) Nos. 2127 of 2021, decided on 24.02.2021 and Pinstar Automotive India Pvt. Ltd. vs. Additional Commissioner , W.P. No. 8493 of 2023 and WMP No. 8686 of 2023 decided on 20.03.2023; judgment of Calcutta High Court in case of M/s LG