Fraudulent Input Tax Credit claims denied after firms found non-existent despite documentary compliance

The HC dismissed a review petition challenging denial of Input Tax Credit (I.T.C.) for fraudulent claims. The petitioner claimed I.T.C. on inward supplies from three firms that were found non-existent and bogus following investigation by Special Investigation Branch. Despite documentary compliance, the firms existed only on paper with no actual premises or supply capability. The court upheld the appellate authority's findings based on survey evidence showing fake invoices without actual goods supply. The petitioner's additional evidence in review proceedings could have been presented earlier and supported revenue's position regarding fake GST numbers and mobile numbers on transport receipts.

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Issues Involved:
1. Fraudulent ITC Claims
2. Validity of Supplier Firms
3. Review Petition Grounds
4. Legal Standards for Review

Summary:

Fraudulent ITC Claims:
The petitioner, engaged in the manufacture and sale of Aluminum Casting & Machinery Parts, filed GSTR 3B for specific months in 2019. A survey by the Deputy Commissioner, Special Investigation Branch, revealed that the petitioner fraudulently claimed ITC benefits of Rs. 10,12,491/- based on fake invoices from non-existent firms, violating provisions of law.

Validity of Supplier Firms:
The adjudicating authority issued a notice u/s 74, and despite the petitioner submitting various documents to support the claim of inward supplies, the authority found the firms to be non-existent and bogus. Consequently, the benefit of ITC was declined, and penalties and interest were imposed. The appellate authority corroborated these findings, noting discrepancies in transport documents and invalid GSTIN numbers.

Review Petition Grounds:
The petitioner sought a review of the court's order dated 14.05.2024, alleging errors apparent on the face of the record and that the court had blindly believed the revenue's stand without proper verification. The petitioner also cited Order 47 Rule 1 C.P.C., claiming the discovery of new evidence, including an affidavit from the transporter.

Legal Standards for Review:
The court examined the provisions of Order XLVII, Rule 1 (1) C.P.C., and referenced the Supreme Court's judgment in S. Madhusudhan Reddy Vs. V. Narayan Reddy, emphasizing that a review is not an appeal in disguise and is only permissible for errors apparent on the face of the record. The court found that the order dated 14.05.2024 considered all submissions and materials presented by the petitioner. The review petition's allegations were deemed unsubstantial, and the affidavit from the transporter did not provide grounds for review as it could have been presented earlier with due diligence.

Conclusion:
The review petition was dismissed, with the court deprecating the disrespectful manner of drafting the review application. The court upheld the findings of fraudulent ITC claims and the non-existence of supplier firms, affirming the penalties and interest imposed by the adjudicating and appellate authorities.

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