2024 (6) TMI 662 - HC - GST

High Court Grants Appeal Extension, Mandates Proof of Goods Movement and Transaction Authenticity for Tax Credit Consideration

HC allowed condonation of delay in appeal. Appellant directed to prove goods movement and transaction genuineness through documentary evidence. ... Challenge to the adjudication order rejected - denial of ITC - HELD THAT:- The adjudicating authority has not caused any verification of the genuineness at the supplier’s end. According to the appellant, who is the purchaser, he has the valid tax invoice and taxes have been paid and if the registration of the supplier had been cancelled retrospectively, they should not be penalised and their input tax credit cannot be denied. The appellant has to first prove through documents the aspect regarding the movement of goods to establish the genuineness of the transaction. If the same is proved by documentary evidence, then the adjudicating authority can be directed to cause verification at the supplier’s end. Without proving the movement of goods, the appellant cannot escape the liability. However, since this aspect of the matter was not properly agitated by the appellant before the authority, we are inclined to grant one more opportunity to the appellant to go before the adjudicating authority to first prove the movement of goods pursuant to the tax invoice, which was issued to the appellant. The appeal and the connected application are disposed of by directing the appellant to treat the order in original dated 16th October, 2023 as a show cause notice and submit his reply to the same enclosing documents to prove movement of goods. Appeal disposed off. Issues involved: Delay in filing the appeal, challenge to adjudication order, verification of genuineness at supplier's end, movement of goods, input tax credit denial.Delay in filing the appeal: The High Court of Calcutta allowed the condonation of delay in filing the appeal due to sufficient cause shown by the appellant.Challenge to adjudication order: The Court directed the appellant to prove the movement of goods to establish the genuineness of the transaction. If proven, the adjudicating authority will verify at the supplier's end; otherwise, the findings in the adjudication order will be reaffirmed.Verification of genuineness at supplier's end: The appellant, as the purchaser, claimed to have valid tax invoices and paid taxes. The Court emphasized the need to prove the movement of goods through documentary evidence before the adjudicating authority can verify at the supplier's end.Movement of goods and input tax credit denial: The appellant was granted an opportunity to prove the movement of goods to avoid denial of input tax credit. The Court instructed the appellant to treat the original order as a show cause notice and submit documents for verification.Conclusion: The appeal and application were disposed of with directions for the appellant to prove the movement of goods. The adjudicating authority will investigate based on the submitted documents. The authenticity of documents produced by the appellant will be rigorously verified.