Writ Petitions Dismissed for ITC Denial Due to Fake Invoices and Non-Compliance with Section 16(2) (2)

The HC dismissed the writ petitions challenging the denial of input tax credit (ITC) on purchases from a supplier issuing fake invoices. The petitioner failed to avail the opportunity for personal hearing despite multiple notices and reminders. The court found no compliance with Section 16(2) conditions for claiming ITC, noting the supplier's address was non-operational and business was not conducted there. The petitioner's factual arguments were deemed unsuitable for writ jurisdiction. The petitioner was directed to pursue the remedy through an appeal before the Deputy Commissioner (St).

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Issues involved:
The judgment involves the quashing of assessment orders passed by the respondent in two separate cases for different assessment years.

Issue 1 - Violation of principles of natural justice:
The petitioner, a sole proprietary concern dealing with various products and services, challenged assessment orders alleging non-existent trading activities and claiming ineligible Input Tax Credit (ITC) without original sale transactions. The petitioner contended that the impugned orders were passed without considering their explanations and without providing copies of documents, violating principles of natural justice.

Issue 2 - Rejection of ITC and alternative remedy:
The respondent rejected the ITC claimed by the petitioner based on the closure of the seller's business premises and subsequent cancellation of GST registration. The petitioner argued that the assessment was made without providing an opportunity to present their case and that the transactions were genuine, supported by the seller's compliance with tax obligations. The respondent argued that the petitioner had an effective alternative remedy available but chose to approach the High Court directly.

Judgment:
The High Court observed that the petitioner was given opportunities for personal hearings and to submit objections, which were not fully utilized. The impugned orders highlighted fake invoices and discrepancies in claiming ITC, indicating that the petitioner failed to prove compliance with input tax credit conditions. The Court noted that the seller's premises were found locked and used as a residence, with no business activities taking place. The judgment emphasized that the petitioner's arguments were factual and based on records, not suitable for consideration in a writ Court. As the petitioner had an effective appellate remedy available, the Writ Petitions were dismissed, directing the petitioner to file an appeal within two weeks from the date of the order, with the possibility of condoning the delay in filing the appeal.

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