Input tax credit wrongful availment requires proof of physical movement; failure leads to sustained tax demand and penalty.

The article addresses wrongful availment of input tax credit, emphasising that ITC is a conditional concession requiring strict compliance; the claimant bears the burden of proof to establish actual physical movement of goods and genuineness of transactions. Documentary materials such as tax invoices, e-way bills, GRs and bank payments alone are insufficient; additional evidence like freight payment particulars, delivery acknowledgements and toll receipts may be required. Where such proof is absent, initiation of recovery and penalty proceedings against the registered person is sustainable and the challenge to those proceedings may be dismissed.

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Issues Involved:
1. Functionality of GST Tribunal in Uttar Pradesh.
2. Legality of the input tax credit (ITC) claim by the petitioner.
3. Conditions for availing ITC under the UP GST Act.
4. Burden of proof for ITC claims.
5. Physical movement and genuineness of goods for ITC.

Summary of Judgment:

Functionality of GST Tribunal in Uttar Pradesh:
The High Court entertained the Writ Tax due to the non-functionality of the GST Tribunal in Uttar Pradesh as per the Gazette notification dated 14.09.2023.

Legality of the Input Tax Credit (ITC) Claim by the Petitioner:
The petitioner challenged the order dated 04.10.2019 by the Commercial Tax Officer and the subsequent order dated 06.03.2021 by the Additional Commissioner, which demanded Rs. 12,32,148/- for wrong availment of ITC under Section 74 of the UP GST Act.

Conditions for Availing ITC under the UP GST Act:
The petitioner argued that ITC should not be denied if the selling dealer did not deposit the tax, as the petitioner had paid through banking channels. The petitioner cited judgments from other High Courts to support their claim.

Burden of Proof for ITC Claims:
The respondent contended that under Section 16 of the UP GST Act, the petitioner must prove beyond reasonable doubt the actual transaction, including physical movement of goods, payment of freight charges, and other details. They relied on the Supreme Court judgment in State of Karnataka Vs. M/s Ecom Gill Coffee Trading Private Limited, which held that the burden of proof lies on the purchasing dealer.

Physical Movement and Genuineness of Goods for ITC:
The Court noted that the petitioner failed to provide sufficient evidence of the physical movement of goods, such as payment of freight charges, toll receipts, and acknowledgment of delivery. The Court emphasized that mere submission of tax invoices, e-way bills, and payment details is insufficient to claim ITC.

Conclusion:
The Court dismissed the writ petition, stating that the petitioner failed to prove the actual physical movement of goods and the genuineness of the transaction. The recent Supreme Court judgment in M/s Ecom Gill Coffee Trading Private Limited was deemed applicable, reinforcing that the burden of proof for ITC claims rests with the dealer.

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