Appellate authority must specify required documents when denying ITC claims from cancelled suppliers

HC allowed writ petition by way of remand regarding inadmissible ITC utilization from cancelled suppliers for September-October 2017 period. Petitioner had discharged initial burden of proof by producing inward tax supply invoices, party ledger, bank statements, GSTR-2A, and e-waybills including transporter details, with supplier having filed returns for relevant period. Appellate authority's finding denying ITC eligibility without specifying required additional documents was deemed perverse and non-application of mind, being verbatim reproduction of adjudicating authority's observations. Matter remanded to appellate authority to reconsider issue of goods movement with proper specification of documentary requirements.

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Issues:
Challenge to order under WBGST/CGST Act, 2017 regarding inadmissible Input Tax Credit (ITC) utilization from cancelled suppliers.

Analysis:
The writ petition challenged an order under Section 73 of the WBGST/CGST Act, 2017, regarding inadmissible ITC utilization from suppliers whose registration had been cancelled. The petitioner contended that the appellate authority overlooked relevant documents produced during the appeal, including party ledger, tax invoices, bank statements, and GSTR-2A, proving the legitimacy of transactions. The petitioner's supplier had validly filed returns during the relevant period, supporting the ITC claim. However, the appellate authority deemed the petitioner ineligible for ITC due to alleged non-disclosure of transport-related documents.

The respondents argued that the burden of proof for ITC eligibility lay with the petitioner, who failed to provide sufficient evidence of goods movement. They claimed the petitioner did not substantiate loading, transportation, and unloading expenses, essential for proving transaction genuineness. The respondents contended that the petitioner's failure to produce crucial documents justified the denial of ITC.

The court noted that the petitioner had initially discharged the burden of proof by presenting e-way bills, invoices, bank statements, and GSTR-2A, showing the transaction's authenticity. Despite this, the appellate authority, without specifying necessary documents for disclosure, concluded the petitioner was ineligible for ITC. The court found the appellate authority's decision lacking proper consideration and directed a reconsideration of the matter.

The court remanded the case to the appellate authority for a fresh review, emphasizing the importance of verifying the disclosed documents' consistency with the transactions in question. The appellate authority was instructed to decide the appeal promptly, preferably within eight weeks, after ensuring the documents matched the relevant transactions. The petitioner was permitted to submit additional documents if required, and the previous deposit was treated as a pre-deposit for legal purposes. The writ petition was disposed of with no costs awarded, and parties were granted access to a certified copy of the order upon request.

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