Input Tax Credit reversal upheld where movement not substantiated; writ dismissed but statutory appeal permitted within thirty days

Blocking and reversal of inadmissible input tax credit was contested; the respondent applied mind when issuing the order, and natural justice principles were satisfied. The petitioner produced invoices and an e-way bill but failed to provide additional evidence to substantiate movement of goods, rendering the challenge meritless and the writ dismissed. The petitioner was granted liberty to file a statutory appeal before the Appellate Commissioner within thirty days and to produce supporting documents and arguments there.

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Issues: Whether the impugned order dated 10.09.2025 in Form GST DRC-07 confirming the demand and imposing reversal of inadmissible input tax credit, penalty and interest under Section 74 (TNGST Act, 2017) and interest under Section 50(1) should be set aside.

Analysis: The Court examined whether the Respondents applied their mind in confirming the demand and whether the Petitioner had produced sufficient evidence to substantiate genuineness of supplies and movement of goods. The impugned order records that the taxpayer produced invoices and e-way bills but failed to produce corroborative materials such as CCTV footage, toll receipts, lorry receipts and bank statements showing payment to suppliers. The order was passed under Section 74 of the TNGST Act, 2017 and interest was computed under Section 50(1). The Court noted that the Petitioner has a pending challenge to blocking of ITC in a separate petition and that liberty was appropriate to allow statutory appeal to the Appellate Commissioner for full ventilative consideration.

Conclusion: The Writ Petition is dismissed. The impugned order confirming the demand, reversal of inadmissible ITC, penalty and interest is upheld. The Petitioner is granted liberty to file a statutory appeal before the Appellate Commissioner within thirty days, and if filed, the Appellate Commissioner shall decide the appeal on merits without reference to limitation within thirty days from receipt of a copy of this order.

Final Conclusion: The Court finds no merit in interfering with the impugned order and disposes of the writ petition by dismissal while preserving the petitioner's remedy of statutory appeal.

Ratio Decidendi: Where a taxpayer fails to produce corroborative evidence to substantiate movement of goods and payment to suppliers, the authority may, after applying its mind, confirm demand and reverse inadmissible input tax credit, impose penalty under Section 74 and interest under Section 50(1).

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