GST demand fails where invoices, e-way bill and transit verification support genuine movement of goods despite later supplier cancellation.

A GST demand based on alleged paper transactions was found unsustainable where the movement of goods was supported by tax invoices, e-way bill data, vehicle particulars, and contemporaneous transit verification under a Bill to Ship to arrangement. The supplier's registration having been cancelled only after the supply could not, by itself, justify an adverse inference against the purchaser on the relevant date. In the absence of rebuttal material discrediting the billing trail or showing the transaction to be fictitious, reversal or denial of benefit was not legally sustainable, and the challenge to the assessment and recovery action succeeded.

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Issues: Whether proceedings under Section 74 of the U.P. Goods and Services Tax Act could be sustained on the premise that the transaction was a paper transaction and the supplier was not registered, when the goods moved under a Bill to Ship to invoice, the vehicle and e-way bill were verified in transit, and the supplier held a valid registration on the date of supply.

Analysis: The transaction was supported by tax invoices, e-way bill, vehicle particulars, and contemporaneous interception details showing movement of goods from Raipur to the petitioner as consignee in a Bill to Ship to arrangement. The material placed on record was not contradicted by any rebuttal evidence. The supplier's registration was cancelled only subsequent to the transaction, so the status of the supplier on the relevant date could not justify an adverse inference against the petitioner. In the absence of any material discrediting the movement of goods or the billing trail, denial of benefit and reversal action was not legally sustainable.

Conclusion: The challenge to the assessment and recovery action succeeded, and the impugned orders were held unsustainable and set aside.

Final Conclusion: The writ petition was allowed and the petitioner obtained relief against the GST demand and consequential recovery.

Ratio Decidendi: Where a goods transaction is evidenced by a valid billing channel and contemporaneous transit verification, adverse inference cannot be drawn merely because the supplier's registration is cancelled later, in the absence of rebuttal material showing the transaction to be fictitious.

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