2023 (11) TMI 1157 - HC - GST

Petitioner fails to prove genuine transactions, loses appeal against GST Section 74 proceedings for fake invoices

M/s Shiv Trading Versus State of U.P. And 2 Others

The Allahabad HC dismissed the petitioner's appeal challenging proceedings under Section 74 of the GST Act. The petitioner claimed to have purchased goods ... Rejection of appeal of the petitioner - Correctness of proceedings u/s 74 of the GST Act - petitioner failed to discharge its onus to prove and establish beyond doubt the actual transaction as well as the genuineness of the transactions - HELD THAT:- It is admitted fact between the parties that the goods have been shown to be purchased from M/s Krishna Trading Company, Mathura. In support thereof, tax invoice, e-way bill, weighment receipt before & after loading, bilty, etc. were filed and on the basis of the said documents, ITC was availed by the petitioner. Thereafter, on scrutiny, neither M/s Krishna Trading Company was found to be in existent, nor the persons, who issued the bilty and weighment slip, was found in existent. Once the very basis to show that the movement of goods has taken place was doubted, the petitioner, apparently, failed to prove actual physical movement of goods. From the perusal of the record shows that the petitioner failed to discharge its onus to prove and establish beyond doubt the actual transaction, actual physical movement of goods as well as the genuineness of the transactions and as such, the proceedings have rightly been initiated against the petitioner under section 74 of the GST Act. Thus, no interference is called for in the impugned order - petition dismissed. Issues:The issues involved in the judgment are the non-existence of a GST Tribunal in the State of Uttar Pradesh and the challenge against the order imposing tax and penalty on a registered proprietorship firm for alleged bogus transactions.Non-existence of GST Tribunal:The Writ Tax is entertained due to the absence of a GST Tribunal in Uttar Pradesh as notified by the Central Government. This absence allows the High Court to consider the matter.Challenge against Tax Imposition Order:The petitioner, a registered proprietorship firm dealing in machinery parts, challenged an order imposing tax, penalty, and interest for alleged fictitious transactions with a non-existent company. The petitioner availed Input Tax Credit (ITC) based on documents like tax invoices, e-way bills, and payments made through banking channels.Petitioner's Argument:The petitioner contended that all necessary documents were submitted to support the transactions, but authorities deemed them fake. The petitioner cited various High Court and Supreme Court judgments to support the claim that genuine transactions were conducted.Respondent's Argument:The respondent argued that the documents submitted by the petitioner, such as weighment slips and bilty, were found to be fake upon inquiry. The burden of proof lies on the dealer to establish the actual movement of goods, as emphasized in a Supreme Court judgment.Court's Analysis:The Court noted discrepancies in the documents submitted by the petitioner, leading to doubts about the actual movement of goods. The burden of proving the genuineness of transactions and physical movement of goods rests on the dealer claiming ITC, as per relevant legal provisions and court precedents.Judicial Precedents:The Court referenced legal principles from the Supreme Court and other High Courts emphasizing the dealer's responsibility to prove genuine transactions and physical movement of goods to claim ITC. Failure to establish these aspects justifies the initiation of proceedings against the dealer.Conclusion:Based on the evidence and legal principles, the Court found that the petitioner failed to prove the actual transactions and movement of goods, justifying the initiation of proceedings under section 74 of the GST Act. The writ petition was dismissed for lack of merit.Separate Judgement:No separate judgment was delivered by the judges in this case.