2024 (2) TMI 423 - HC - GST

Supplier Transaction Evidence Allows Tax Credit Reassessment Under GST Compliance Guidelines for Trading Company

HC ruled on ITC blockage for a trading company. After reviewing evidence of supplier transactions and GST compliance, the court directed tax authorities ... Removal of blockage of Input Tax Credit (ITC) in the Electronic Credit Ledger of the petitioner - suppliers obtained GST registration on the basis of fabricated documents - HELD THAT:- In order to establish that the transactions with M/s. Vetrivel Traders and M/s. Shri Vaari Steels were genuine, the petitioner is under an obligation to produce documents to establish purchase and receipt of the relevant goods. Such documents may be in the form of invoices, e-way bills, lorry receipts, delivery challans, bank statements and the like. In the communication dated 17.11.2023 to the respondent, the petitioner has stated that these documents are with the central authorities. As regards the documents relating to transactions with M/s.Vetrivel Traders, it appears from communication dated 08.12.2023 that the said documents were provided later to the respondent. It is unclear from the documents on record as to whether documents pertaining to purchases from M/s.Shri Vaari Steels were provided. In any case, the petitioner is under an obligation to provide the same. Since a request was made by the petitioner on 08.01.2024 to release the blocked ITC in the Electronic Credit Ledger, it is just and necessary that the respondent takes a decision with regard to such request expeditiously. This writ petition is disposed of by directing the respondent to consider and dispose of the representation dated 08.01.2024 within thirty days from the date of receipt of further documents from the petitioner after taking into account all documents produced by the petitioner to establish that the transactions were genuine. Issues involved: The petitioner seeks direction for the removal of blockage of Input Tax Credit (ITC) in Electronic Credit Ledger.Comprehensive Details:1. The petitioner, engaged in trading iron and steel articles and registered under GST laws, had their ITC blocked after an inspection of two suppliers' premises. The petitioner filed a writ petition requesting the release of the blocked ITC, claiming genuine transactions with the suppliers.2. The petitioner's counsel argued that the blockage of ITC has prejudiced the petitioner, hindering their ability to file returns using ITC. The respondent failed to act on the request to release the block on ITC.3. The Government Advocate for the respondent stated that the suppliers were involved in bill trading and obtained GST registration using fabricated documents. An intimation in Form GST DRC-01A was issued to the petitioner regarding this matter.4. To prove the genuineness of transactions with the suppliers, the petitioner must provide various documents such as invoices, e-way bills, lorry receipts, delivery challans, and bank statements. The petitioner mentioned that some documents were with central authorities, and some were provided to the respondent, but clarity is needed on documents related to purchases from one of the suppliers.5. A request made by the petitioner on 08.01.2024 to release the blocked ITC was highlighted, emphasizing the need for the respondent to promptly consider and decide on the request.6. The writ petition was disposed of by directing the respondent to review and address the representation within thirty days from receiving further documents from the petitioner. The petitioner was granted permission to submit additional documents within one week from receiving a copy of the order. The case was closed with no costs incurred.