AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (10) TMI 114
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.... petitioner is also seeking an order to quash the impugned demand letter-1 CTO/ (AUDIT)-3/BGV/2023-24/B-314, dated 15.07.2023 (Annexure-O) and impugned endorsement letter-2 CTO/(AUDIT)-3/BGV/ENDORSEMENT/ 2023-24/B-379, dated 10.08.2023 (Annexure-S) of respondent No.7 as being illegal, arbitrary, extra-legislative and contrary to the order in Order No.09/2019-Central Tax, dated 03.12.2019 issued by respondent No.3 (Annexure-W), instructions in Circular No.132/2/2020, dated 18.03.2020 issued by respondent No.3 (Annexure-X) and Circular GST-01/2020, dated 27.04.2020 issued by respondent No.4 (Annexure-A1). 3. Petitioner is a partnership firm carrying on business of trading in the granite slabs and blocks at Bailhongal, Karnataka State. Petitioner is a registered person under GST Law possessing GST Identification No.GSTIN as 29AAOFM2421R1ZM. Petitioner is said to have purchased certain goods from the supplier, therefore, under Section 16(1) of the Central Goods and Services Tax Act, 2017 and Karnataka Goods and Services Tax Act, 2017 (for short, 'the Act') it entitles a 'registered person' to take credit of the input tax charged on any supply of goods or services to hi....
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....estigation steps were initiated or taken against the faulted suppliers. Prior to initiating the current demand proceedings for reversal of Input Tax Credit against the petitioner and so also no material evidence was produced to demonstrate that the investigation, demand or recovery actions were initiated against the faulted suppliers. 5. Learned counsel for the petitioner further relies on the press release dated 04.05.2018 issued by the GST Council, which states that only in exceptional situations when the supplier is missing or he closed his business has become insolvent, the authority respondent No.7 could precipitate the matter directly for demand and recovery of the amount from the purchaser namely the petitioner herein. 6. It is the vehement contention of learned counsel for the petitioner that without initiating any process as stated herein above, to trace the supplier or any material with regard to the supplier having defaulted, missing or has become insolvent or closed his business, a demand has been made against the petitioner herein which has been affirmed and the same is questioned by the petitioner before this Court. 7. Learned counsel for the petitioner in support ....
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....ection 16 of the GST Act, to show and the same would lie on such person to show that he is entitled for the Input Tax Credit. Learned Addl. Government Advocate for the respondents also contends that the press release issued by the Central Board of GST Council on 04.05.2018 may not be applicable to the petitioner as a general rule as it comes with exceptions and it will have to be based on the facts and circumstances of each of the case. He further contends that in case of default in payment of tax by the seller, recovery shall be made from the seller. However, reversal of credit from buyer shall also be an option available with the revenue authorities to address exceptional situations like missing dealer, closure of business by the supplier or supplier not having adequate assets, etc.,. 11. In the present case on hand, it is contended that the petitioner has issued four invoices as detailed in the Table-I, but it is noticed that E-Sugam facility was utilized based on the vehicle numbers provided. The details of the vehicle were checked by the RTO website and out of the four vehicles, the details of three vehicles are not available in the RTO website, which clearly indicates that b....
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....sment Officer and on verification of records, not being satisfied with the supplier having paid the taxes under section 39 of the Act, issued demand notice to the petitioner. It is relevant to extract section 16 of the Central Goods and Services Tax Act, 2017, which reads as under: Eligibility and condition for taking input tax credit. 16. (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,- (a) XXX (aa) XXX (b) XXX (i) XXX (ii) XXX (ba) XXX (c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax c....
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.... i.e., revenue, that the so called tax which has been made good by the petitioner purchaser against the transaction has not been remitted to the State Exchequer. Secondly, such tax is not paid, returns also not filed, so also the supplier has not filed the returns as contemplated under the Act and while conducting the audit, the revenue has also unearthed that the vehicle in which the goods were supplied so quoted by the petitioner, has also not been registered before the RTA, i.e., the Road Transport Authority. 19. Therefore, the fundamental principles would be that before the revenue initiates action against the purchaser, like the petitioner, it is incumbent upon the revenue to cause an inquiry with the supplier and if he is available, recover the tax which is not paid, and thereafter only penalize the appellant, if he is otherwise liable. The judgments referred to by the learned counsel for the petitioner are also in the same line wherein it is held by the Hon'ble Division Bench of the Calcutta High Court that without causing inquiry with the supplier penalizing the purchaser is arbitrary, illegal and without jurisdiction. 20. Now the question before this Court is whether....
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....duces a false tax invoice, credit or debit note, declaration, certificate or other document with a view to support or make any claim that a transaction of sale or purchase effected by him or any other dealer, is not liable to be taxed, or liable to tax at a lower rate, or that a deduction of input tax is available, the prescribed authority shall, on detecting such issue or production, direct the dealer issuing or producing such document to pay as penalty : (a) in the case of first such detection, three times the tax due in respect of such transaction or claim; and (b) in the case of second or subsequent detection, five times the tax due in respect of such transaction or claim. (3) Before issuing any direction for the payment of the penalty under this Section, the prescribed authority shall give to the dealer the opportunity of showing cause in writing against the imposition of such penalty." 9.1 Thus, the provisions of Section 70, quoted hereinabove, in its plain terms clearly stipulate that the burden of proving that the ITC claim is correct lies upon the purchasing dealer claiming such ITC. Burden of proof that the ITC claim is correct is squarely upon the assessee who h....
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.... the selling dealer, details of the vehicle which has delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. The purchasing dealers have to prove the actual physical movement of the goods, alleged to have been purchased from the respective dealers. If the purchasing dealer/s fails/fail to establish and prove the said important aspect of physical movement of the goods alleged to have been purchased by it/them from the concerned dealers and on which the ITC have been claimed, the Assessing Officer is absolutely justified in rejecting such ITC claim. 11. In the present case, the respective purchasing dealer/s has/have produced either the invoices or payment by cheques to claim ITC. The Assessing Officer has doubted the genuineness of the transactions by giving cogent reasons on the basis of the evidence and material on record. In some of the cases, the registration of the selling dealers have been cancelled or even the sale by the concerned dealers has been disputed and/or denied by the concerned dealer. In none of the cases, the concerned purchasing dealers have produced any further supporting material....
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....respective dealers and if the respective purchasing dealer fails to establish and prove the important aspect of physical movement of the goods alleged to have been purchased from the concerned dealers on which the ITC has been claimed, the Assessing Officer is absolutely justified in rejecting such ITC claims, though in the present case the petitioner has produced documents to show that there is existence of the supplier and he is continuing his business by virtue of a separate GST number and has also now produced along with a memo photograph showing some of the godowns belonging to the supplier. 24. The fact remains that the goods that was moved and purchased from the supplier to the purchaser, the vehicles in which it was moved have not been traced and those appear to be fraudulent and not registered before the Regional Transport Authority. Therefore, the provisions of section 16 (2) (c) (d) is squarely applicable to the case on hand. Whether the tax charge in respect of supplier actually has been paid to the Government, either in cash or through utilization of Input Tax Credit admissible in respect of the said supply would have to be proved by the purchaser as contemplated unde....