2024 (2) TMI 1466 - HC - GST

Input Tax Credit Blocked: Spice Trader Fails to Prove Genuine Business Operations Under Rule 86A CGST

SHINE ABRAHAM Versus THE STATE TAX OFFICER, THE COMMISSIONER OF STATE GOODS & SERVICES TAX THIRUVANANTHAPURAM

Kerala HC affirmed CGST department's blocking of input tax credit for a spice trader who could not substantiate business operations at registered address. ... Blocking of ITC invoking Rule 86A of the CGST Act - reasons to believe - business establishment of the appellant was not functioning at the registered place, as he declared - HELD THAT:- The appellant was provided the opportunity to produce the documents, if any, to show that his business establishment was functioning at the registered place and that he was actually conducting business therein. Even though the appellant produced a few documents, none of them show that he is physically occupying the building or conducting any business there. The electricity bill produced by the appellant shows that the consumption of electricity for the last month was zero. It is true that before giving Ext.P3, no explanation was sought from the appellant. However, the appellant is allowed to produce documents showing his actual physical occupation of the building and running the business in it, but, he failed to produce the same. In these circumstances, there are no reason to remit the matter to the respondents. The appeal fails, and accordingly, it is dismissed. The High Court of Kerala upheld the blocking of input tax credit of a businessman trading in spices under the name 'M/s Evershine Agro Spices' by the CGST department. The appellant failed to prove the functioning of his business establishment at the registered place, leading to the dismissal of the appeal challenging the blocking of credit under Rule 86A of the CGST Act. The appellant can seek permission for future credit. The appeal was dismissed.