2025 (8) TMI 394 - HC - GST

Petition Dismissed for Blocking Electronic Credit Ledger and Denial of ITC Under GST Rules

The HC dismissed the petition challenging the blocking of the electronic credit ledger and denial of ITC. The court held there was no violation of natural ... Blocking of electronic credit ledger - denial of ITC - adjudication order was passed without making such documents available to the petitioner - petitioner is not provided with an opportunity to cross-examine - violation of principles of natural justice - HELD THAT:- The fact that the petitioner’s representative had opposed the re-examination and had not participated in the same, would corroborate from the minutes of the proceedings dated 5th July, 2024, inter alia, including the email communication dated 8th July, 2024 - the order passed by the proper officer takes into consideration the entirety of the stand taken by the petitioner and deals with the response given by the petitioner in detail. From a perusal of the same, it cannot be said that the order is perverse. The petitioner chose not to approach the appellate authority, instead he had approached this Court by giving a go-by to the appellate provision. Although, the petitioner strongly argued that it was the obligation of the proper officer to ascertain the toll plaza reports before holding the petitioner guilty of having availed ITC on the basis of fake transactions, it is noted that it was the initial obligation of the petitioner to place such documents. Ordinarily the obligation to prove a fact remains with the person who alleges the same. Since, the petitioner in this case seeks to claim that the vehicles which were employed by the petitioner, had transported the goods, it was the obligation of the petitioner to provide documents, inter alia, including the documents in the form of toll plaza reports to establish and prove such fact. The petitioner having not discharged his onus, the same could not be thrust upon the State by holding out that it is the obligation of the State to do so - The case pertains to a public auction undertaken by the State. The appellant was awarded the tender, however, possession of the sand block where the appellant was granted excavation right was not delivered though, the entire cost was deposited. The prayer for refund of the auction amount was rejected. It is in that context, the Hon’ble Supreme Court observed that the State should act as a model litigant. The above case does not assist the petitioner. The petitioner has failed to make out any case of jurisdictional error for less any illegally or irregularly committed by the proper officer - Petition dismissed. ISSUES: Whether the adjudication order blocking the electronic credit ledger and denying Input Tax Credit (ITC) was validly passed under the WBGST / CGST Act, 2017.Whether the petitioner was afforded a fair opportunity of hearing, including the right to cross-examine witnesses whose statements were relied upon in the adjudication.Whether the proper officer was obligated to verify toll plaza records or other transport documents before concluding that ITC was availed on the basis of fake invoices.Whether the petitioner's failure to participate in re-examination of witnesses affects the right to cross-examination and fairness of the proceedings.Whether the writ petition is maintainable in the face of available statutory appellate remedies. RULINGS / HOLDINGS: The adjudication order was not found to be perverse or illegal as the proper officer duly considered the petitioner's responses and evidence before passing the order.The petitioner was afforded adequate opportunity to cross-examine the key witnesses, including Sri Shyam Sundar Tiwari and Ashoke Kumar Saha; refusal by the petitioner's representative to participate in re-examination does not amount to denial of opportunity to cross-examine.The obligation to produce toll plaza records and other transport documents lay with the petitioner, and the proper officer was not required to independently verify such documents not in their custody.The petitioner's failure to participate in re-examination and refusal to sign the note sheet precludes a complaint of denial of cross-examination rights.The writ petition is not maintainable as the petitioner had an available statutory appellate remedy which was not availed, and no jurisdictional error or illegality was demonstrated. RATIONALE: The Court applied the provisions of the WBGST / CGST Act, 2017, particularly Section 86A relating to blocking of electronic credit ledger and procedural safeguards in adjudication.The Court relied on the principle that the burden of proof lies on the party alleging facts, here the petitioner to produce evidence such as toll plaza reports to substantiate transport of goods.The Court distinguished precedents cited by the petitioner (Granules India Limited and Popatrao Vyankatrao Patil) on their facts, noting those judgments did not impose an obligation on the revenue to collect evidence not in their possession.The Court emphasized that refusal to participate in re-examination constitutes waiver of further cross-examination rights and does not vitiate the proceedings.The Court noted the availability of statutory appellate remedies under the GST regime and held that writ jurisdiction is not a substitute for such remedies absent jurisdictional errors.