High Court overturns tax liability order under UP GST Act due to lack of evidence

The High Court allowed the petition challenging an order under the Uttar Pradesh Goods and Services Tax Act, 2017. The petitioner, held liable for tax on concealed turnover of iron scrap, successfully argued that discrepancies in GSTR-3B and GSTR-2A did not prove tax evasion, as genuine invoices and e-way bills supported the transactions. The court found the revenue authority's conclusion baseless and remitted the matter for a fresh decision, with provisions for adjusting any deposited amounts against the final demand.

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Issues:
Challenge to order under Uttar Pradesh Goods and Services Tax Act, 2017 - Concealed turnover of iron scrap - Appeal against tax and penalty imposition - Discrepancies in GSTR-3B and GSTR-2A - Explanation furnished by petitioner rejected for two "loose purchases" - Validity of assessing authority's order under Section 130(2) of the Act.

Analysis:
The petitioner challenged an order passed by the appellate authority under the Uttar Pradesh Goods and Services Tax Act, 2017, which partly allowed the appeal arising from proceedings under Section 130(2) of the Act. The petitioner was held liable for tax on concealed turnover of iron scrap amounting to Rs. 20,00,000, with tax and penalty of Rs. 3,60,000 each being sustained. The petitioner contended that the assessing authority determined the turnover solely based on non-production of books of accounts and discrepancies in auto-populated GSTR-3B and GSTR-2A. The petitioner explained discrepancies and sought to reconcile "loose purchases" with original tax invoices and e-way bills (para 2-7).

The petitioner argued that even the two rejected "loose purchases" were regular tax invoices, supported by evidence annexed to the writ petition. The petitioner claimed that e-way bills were uploaded for these transactions, which were not denied by the revenue authority. The High Court noted that the revenue authority's acceptance of the invoices and e-way bills as genuine primary evidence made it baseless to conclude tax evasion. Discrepancies in GSTR-3B and GSTR-2A were not conclusive of tax evasion, especially when transactions were supported by valid documentation (para 8-11).

The High Court found that the revenue authority's conclusion lacked basis due to the existence of genuine invoices and e-way bills. The discrepancies did not establish undisclosed turnover, as implied acceptance of regular transactions by the revenue authority was crucial. Consequently, the petition was allowed, setting aside the order and remitting the matter to the appeal authority for a fresh decision, with provisions for adjusting any deposited amounts against the final demand (para 12).

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