2024 (1) TMI 504 - HC - GST

Tax Credit Challenge: Statutory Appeal Preferred Over Writ Petition for Resolving Complex Input Tax Credit Verification Issues

HC ruled on input tax credit dispute, finding the case involves complex factual issues better resolved through statutory appeal mechanisms. The court ... Entitlement to input tax credit - Proof of receipt of goods for input tax credit - Adjudication of disputed questions of fact by statutory appellate forum - Availability of statutory remedy in tax disputes - Writ jurisdiction under Article 226 not ordinarily available for factual adjudication in tax mattersEntitlement to input tax credit - Proof of receipt of goods for input tax credit - Whether the challenge to refusal of input tax credit based on alleged non-existent supplier can be adjudicated in writ proceedings on the basis of documents filed before the Court. - HELD THAT: - The Court examined the record and the documents submitted by the petitioner and observed that the impugned order denied input tax credit after appraisal of the material regarding purchases from the said supplier. The central question involves the adequacy of evidence to establish actual purchase and delivery of goods to the petitioner, which is the factual foundation for entitlement to input tax credit under the statutory scheme. Such disputes of fact and the assessment of documentary sufficiency are matters best addressed through the statutory adjudicatory process, rather than by exercise of extraordinary writ jurisdiction. Having regard to the factual character of the controversy and the availability of a statutory appeal, the Court concluded that the writ petition was not the appropriate forum for resolving the factual contentions raised by the parties. [Paras 5]Writ petition dismissed; factual dispute over entitlement to input tax credit is not suitable for adjudication under Article 226 and should be pursued before the statutory authority/appeal forum.Adjudication of disputed questions of fact by statutory appellate forum - Availability of statutory remedy in tax disputes - Direction as to the appropriate forum and remedy for adjudication of the denial of input tax credit. - HELD THAT: - The Court noted that a statutory appeal is available against the impugned order and emphasised that the respondent may verify supplier details, including via the GST common portal. Because the determination turns on disputed questions of fact (whether the supplier was functioning at the relevant premises and whether goods were actually received), the Court left it open to the petitioner to pursue the statutory remedy and obtain adjudication and verification by the competent appellate/administrative authority. The Court therefore declined to undertake fact-finding in writ proceedings and directed the petitioner to seek the statutory process. [Paras 5]Petitioner permitted to pursue the statutory appeal/remedy; matter to be considered by the competent statutory forum rather than by the High Court under Article 226.Final Conclusion: Writ petition dismissed without costs; petitioner left free to pursue the available statutory remedy for adjudication of the denial of input tax credit arising from disputed questions of fact. Issues involved: Refusal of input tax credit based on supplies from a non-existent supplier, adequacy of evidence in support of purchase and delivery of goods.For the issue of refusal of input tax credit based on supplies from a non-existent supplier, the petitioner challenged an order refusing input tax credit due to availing credit from a non-existent supplier. The petitioner submitted documents to prove the genuineness of the supply, but the claim was rejected citing missing gate passes and inability to trace the supplier at the registered place of business. The petitioner argued that the supplier is active at a different address in Karnataka, suggesting verification through the GST common web portal. The respondent, represented by the Government Advocate, pointed out the availability of a statutory appeal against the order. It was emphasized that entitlement to input tax credit is governed by Section 16 of the Tamil Nadu Goods and Services Tax Act, requiring the establishment of receiving relevant goods or services. The respondent highlighted that a show cause notice was issued based on an inspection revealing the non-functioning of the registered supplier at the specified premises, suggesting the statutory appellate authority for adjudication due to disputed facts.Regarding the adequacy of evidence in support of the purchase and delivery of goods, the judgment highlighted that input tax credit denial was based on the appraisal of documents related to the alleged purchase from M/s.Siba Auto Private Limited. The resolution of this dispute relied on the sufficiency of evidence demonstrating the actual purchase and delivery of goods to the petitioner. Recognizing the complexity of such disputes, the court dismissed the writ petition without costs, advising the petitioner to pursue the statutory remedy available. The decision underscored that disputes involving factual complexities are not suitable for resolution under Article 226 of the Constitution of India, directing the petitioner to seek recourse through the appropriate statutory channels.