Input tax credit requires proof of genuine purchases and actual tax payment; invoices alone do not secure credit.

Input tax credit under the GST enactments is available only when the statutory conditions are satisfied, including proof that tax on the supply was actually paid and that the claimant has established the genuineness of the purchase transaction. The Karnataka HC held that invoices and banking-channel payments alone are insufficient where the suppliers did not file returns, tax payment was not demonstrated, and the movement of goods was not satisfactorily proved. On that basis, the purchaser failed to discharge the burden of entitlement to credit, and the reversal of input tax credit, along with the appellate affirmation, was upheld.

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Issues: Whether the petitioner was entitled to retain the input tax credit claimed on purchases when the suppliers had not filed returns or remitted tax and whether the demand and appellate order reversing the credit were liable to be quashed.

Analysis: The dispute turned on the statutory conditions for input tax credit and the purchaser's burden to establish entitlement. The judgment applied the rule that credit under the GST enactments is available only when the tax on the supply has actually been paid to the Government and the claimant proves the entitlement to credit. The Court relied on the principle that mere invoices or payment through banking channels do not discharge the burden where the genuineness of the transaction and the actual movement of goods are not established with supporting material. It was found that the suppliers had not filed the relevant returns, tax payment was not demonstrated, and the movement of goods was not satisfactorily proved.

Conclusion: The challenge to the reversal of input tax credit failed. The petitioner was not entitled to the claimed credit and the assessment as affirmed in appeal was upheld.

Ratio Decidendi: A purchaser claiming input tax credit must prove the genuineness of the transaction and the statutory conditions for credit, including actual tax payment on the supply, and in the absence of such proof the revenue may deny the credit.

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