AI Drafter 
TaxTMI 
TaxTMI 
2025 (7) TMI 1623
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....would graciously be pleased to admit this writ application call for record and issue; a) Rule NISI calling upon the opp. Parties to show cause as to why the unilateral action of the O.P. as intimated vide ANNEXURE-1 shall not be set aside / quashed and declared as unwarranted and illegal; And if the O.P. fail to show cause or show insufficient cause make the said Rule absolute; b) Issue a writ in the nature of Mandamus directing the Opposite Parties to withdraw the action of blocking ITC from petitioner's ECL (w.r.t Annexure-1) as prayed in the petition under ANNEXURE-4 within a stipulated period by taking into account the evidences under Annexure-2,3&5 enabling the petitioner to discharge its statutory liabilities without any extra charges. c) Issue any appropriate writ(s)/direction(s)/order(s) deemed fit in the fact and circumstances of the case. And for which act of your kindness, the petitioner shall remain ever pray as in duty bound." Factual matrix: 2. The petitioner, registered taxable person under the Central Goods and Services Tax Act, 2017 and the Odisha Goods and Services Tax Act, 2017 (collectively be called "GST Act") engaged i....
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....hat the alleged supplier- M/s. Metro International assigned with GSTIN 19ABWFM6003E1Z2 confirms that during the financial year 2024-25, the status of the said entity stands as follows: Filing details for GSTR3B Filing details for GSTR-1/IFF Financial Year Tax Period Date of filing Status Financial Year Tax Period Date of filing Status 2024- 2025 November 11/12/2024 Filed 2024-2025 November 11/12/2024 Filed 2024- 2025 October 07/11/2024 Filed 2024-2025 October 07/11/2024 Filed 2024- 2025 September 17/10/2024 Filed 2024-2025 September 10/10/2024 Filed 2024- 2025 August 20/09/2024 Filed 2024-2025 August 09/09/2024 Filed 2024- 2025 July 05/08/2024 Filed 2024-2025 July 05/08/2024 Filed 2024- 2025 June 14/07/2024 Filed 2024-2025 June 11/07/2024 Filed 2024- 2025 May 15/06/2024 Filed 2024-2025 May 11/06/2024 Filed 2024- 2025 April 13/05/2024 Filed 2024-2025 April 11/05/2024 Filed 4.1. Details of statutory compliance with respect to said taxable person depicts as ....
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....d credit Blocked/ umblocked by Reason Integrated Tax(Rs.) Central Tax (Rs.) State/ UT Tax(Rs.) CESS( Rs.) 28-04- 2025 BL2104250000115 Blocked 1,88,120.00 0.00 0.00 0.00 Shri/Mr/MsRAJASHRE E SAHA, Joint Commissioner of State Tax, OD007, Admn. State Supplier found non- functionin g‖ 4.4. On 01.07.2025 when the matter was taken up, Sri Sunil Mishra, learned Standing Counsel submitted that as against the transactions effected by the petitioner, in addition to M/s. Metro International, the allegation in the confidential report contained dealing with another taxable person, namely, M/s. Cerebral Trade Exim bearing GSTIN-19AATFC4263E2Z6, which is also found non-existent. 4.5. In response to such submission, Smt. Kananbala Roy Choudhury, learned Advocate sought for an accommodation to obtain instruction with regard to M/s. Cerebral Trade Exim as the petitioner was unaware about such allegations with respect to such supplier. Accordingly, the matter stood adjourned to 10.07.2025. 4.6. On 10.07.2025, Smt. Kananbala Roy Choudhury, learned counsel for the petition....
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....t. He, therefore, submitted that allowing the prayer of the petitioner at this stage would seriously affect the Revenue. He, on written instruction received from the Joint Commissioner of CT & GST Circle-I, Bhubaneswar, also submitted that the proper officer has exercised power under Section 73 of the GST Act read with Rule 142 of the Rules framed thereunder for recovery of Input Tax Credit as availed by the petitioner in terms of Section 16(2) and, accordingly, notice has been issued inviting reply. It is submitted that till date the petitioner has not submitted any reply. Hence, he submitted that the entire allegations vis-à-vis entitlement of Input Tax Credit is required to be adjudicated upon by the proper officer. This Court may not show any inclination to entertain this writ petition and fervently prayed for dismissal of the same. Analysis and discussions: 5. Perused the materials available on record. Considered the plea, arguments and submissions of counsel for respective parties. 6. On a careful perusal of documents forming part of the writ petition and exchanged between the parties and those furnished before the Court during the course of hearing, it is fou....
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....ed Standing Counsel that in order to justify availing input tax credit it is necessary that the fact- finding statutory authority is required to examine whether by dint of transactions as effected between the alleged suppliers and the petitioner the goods have actually moved from the other State and received at proper destination inside the State of Odisha. Support can be had from The State of Karnataka Vrs. Ecom Gill Coffee Trading Private Limited, (2023) 2 SCR 647, wherein pertinent observation runs as follows: "The burden of proof as per Section 70 of the KVAT Act, 2003 was not an issue before the Delhi High Court. How and when the burden of proof can be said to have been discharged to prove the genuineness of the transactions was not the issue before the Delhi High Court. As observed hereinabove, while claiming ITC as per Section 70 of the KVAT Act, 2003, the purchasing dealer has to prove the genuineness of the transaction and as per Section 70 of the KVAT Act, 2003, the burden is upon the purchasing dealer to prove the same while claiming ITC." 6.2. Therefore, it is unequivocal that the factual details are required to be "apprised by the petitioner" and "appraised....
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....plies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be paid by him along with interest payable under Section 50 in such manner as may be prescribed: Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him to the supplier of the amount towards the value of supply of goods or services or both along with tax payable thereon." 6.3. Rule 36 of the CGST Rules, 2017, makes it abundantly clear with respect to documentation. Said rule is extracted hereunder : "36. Documentary requirements and conditions for claiming input tax credit.- (1) The input tax credit shall be availed by a registered person, including the Input Service Distributor, on the basis of any of the following documents, namely,- (a) an invoice issued by the supplier of goods or services or both in accordance with the provisions of Section 31; (b) an invoice issued in accordance with the....
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....ly a registered person, as defined by Section 2(94) of the CGST Act, can avail of ITC. A person who is registered under Section 25 of the CGST Act becomes a registered person. The availability of ITC is subject to such conditions and restrictions as may be prescribed. The word "prescribed" is defined to mean prescribed by the rules made under the CGST Act. Therefore, the entitlement to ITC is subject to conditions and restrictions as may be provided in the Rules framed under the CGST Act. ITC has to be availed in the manner laid down by Section 49. Sub- section (2) of Section 49 and other sub-sections deal with how ITC can be availed. Under sub-section (1) of Section 16, a registered person is entitled to take credit of the 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 of or in furtherance of his business. Input tax is defined by Section 2(62). In relation to a registered person, it means Central, State, Integrated or Union Territory tax charged on the supply of goods or services or both made to him. It includes the tax payable by him on a reverse charge basis under sub-sections (3) and (4) of Section 9. Fur....
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.... order to avail such concession. Thus, it is not the right of the 'dealers' to get the benefit of ITC but it is a concession granted by virtue of Section 19. As a fortiori, conditions specified in Section 10 must be fulfilled. In that hue, we find that Section 10 makes original tax invoice relevant for the purpose of claiming tax. Therefore, under the scheme of the VAT Act, it is not permissible for the dealers to argue that the price as indicated in the tax invoice should not have been taken into consideration but the net purchase price after discount is to be the basis." 6.7. The pivotal point around which the present matter revolves is exercise of power under Rule 86A of the CGST Rules, which reads as follows: "86A. Conditions of use of amount available in electronic credit ledger.- (1) The Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistnat Commisssioner, having reasons to believe that credit of input tax available in the electronic credit ledger has been fraudently availed or is ineligible in as much as- (a) the credit of input tax has been availed on the strength of tax invoices or debit notes or ....
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....clared in registration. (b) The credit is availed by the registered person on invoices or debit notes, without actually receiving any goods or services or both. (c) The credit is availed by the registered person on invoices or debit notes, the tax in respect of which has not been paid to the government. (d) The registered person claiming the credit is found to be non-existent or is found not to be conducting any business from the place declared in registration. (e) The credit is availed by the registered person without having any invoice or debit note or any other valid document for it. 6.9. The Commissioner or an officer authorised by him, not below the rank of Assistant commissioner, must form an opinion for disallowing debit of an amount from electronic credit ledger in respect of a registered person only after proper application of mind considering all the facts of the case, including the nature of prima facie fraudulently availed or ineligible input tax credit and whether the same is covered under the grounds mentioned in sub-rule (1) of Rule 86A; the amount of input tax credit involved; and whether disallowing such debit of electronic cr....
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....ioner is pending adjudication would be to resolving factual anomaly by the writ Court. This Court, therefore, restrains itself from doing such exercise. This Court feels it pertinent to have reference to a Judgment rendered by the Delhi High Court in Banson Enterprises Vrs. Assistant Commissioner, W.P.(C) No.6503 of 2025, decided on 15.05.2025 [reported at 2025 SCC OnLine Del 3952] declining to entertain writ petition challenging Show Cause Notice, which also has application to the challenging any order or decision which is available for challenge before the appellate authority under the statutory framework. The observation of said Court runs as follows: "10. The Court has considered the matter. As held in Assistant Commissioner of State Tax Vrs. Commercial Steel Limited (2021) 7 SCR 660, a writ petition can be entertained under exceptional circumstances only which are set out in the said judgment as under: '11. The respondent had a statutory remedy under Section 107. Instead of availing of the remedy, the respondent instituted a petition under Article 226. The existence of an alternate remedy is not an absolute bar to the maint....
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....t find any infirmity in the impugned order so as to exercise its extraordinary writ jurisdiction. There is no justification for not challenging the same by way of an appeal. 14. An appeal before the appellate authority is a full- fledged remedy provided under Section 107 of the Central Goods and Service Tax Act, 2017. 15. The contentions that the Petitioner wishes to raise can always be raised in appeal, inasmuch as this Court has already taken a view in W.P.(C) 5737 of 2025 titled Mukesh Kumar Garg Vrs. Union of India & Ors. [decided on 09.05.2025 reported at 2025 SCC OnLine Del 3324] In the said case, the Court, has already taken a view in this regard that where cases involving fraudulent availment of ITC are concerned, considering the burden on the exchequer and the nature of impact on the GST regime, writ jurisdiction ought not to be usually exercised in such cases. The relevant portions of the said judgment are set out below: '11. The Court has considered the matter under Article 226 of the Constitution of India, which is an exercise of extraordinary writ jurisdiction. The allegations against the Petitioner in the impugned order are extremely serious....
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.... and the same cannot be decided in writ jurisdiction. The Court, in exercise of its writ jurisdiction, cannot adjudicate upon or ascertain the factual aspects pertaining to what was the role played by the Petitioner, whether the penalty imposed is justified or not, whether the same requires to be reduced proportionately in terms of the invoices raised by the Petitioner under his firm or whether penalty is liable to be imposed under Section 122(1) and Section 122(3) of the CGST Act. 18. The persons, who are involved in such transactions, cannot be allowed to try different remedies before different forums, inasmuch as the same would also result in multiplicity of litigation and could also lead to contradictory findings of different Forums, Tribunals and Courts.' 16. Under these circumstances, this Court is not inclined to entertain the present writ petition." 6.12. Finding the present case in similitude with that of the above case where decision has been rendered in the context of allegation against the availing input tax credit that fact-finding on the nature of dispute set up by the Department can be subject-matter for adjudication by the statutory authority em....