2025 (9) TMI 53

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....t Year 2021-22 as well as the impugned order dated 07.10.2022 in form GST DRC - 07 under Rule 142(5) passed by the Commercial Tax Officer, Sector - 2, Khurja, Bulandshahar. 3. Learned counsel for the petitioner submits that the petitioner is registered under the GST and is engaged in the business of plastic roofing sheet, etc. On 26.11.2021, the petitioner purchased roofing sheets from one M/s Unique Trading Company, Ghaziabad, in which the petitioner claimed ITC on the basis of tax invoice issued by the supplier. Thereafter, on 20.07.2022, a show cause notice was issued under section 74 of the UP VAT Act on the basis of physical inspection of supplier, which was found to be non-existent. On 27.07.2022, the petitioner filed reply to the sh....

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....t on record, merely because at the time of inspection the selling dealer was not found at the place of business and the registration has been cancelled, will not make the transactions sham and the benefit of ITC cannot legally be denied. 6. He further submits that the proceedings under section 74 of the GST Act can only be initiated if there is a fraud or mis-statement or suppression of fact with a view to evade tax, which is mentioned in the circular dated 13.12.2023. In support of his submissions, he has placed reliance on the judgement of the Apex Court in Suraj Impex (India) Private Limited Vs. Union of India [(2025) 30 Centax 362 (SC)] as well as the judgement of this Court in Commissioner of Sales Tax Vs. S/s Agrawal Rolling Mills [2....

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....genuine. He further submits that at the time of inspection, the selling dealer was not found at the place of business and therefore, the proceedings were rightly initiated. 9. After hearing learned counsel for the parties, the Court has perused the records. 10. It is not in dispute that the transactions between the petitioner and the selling dealer, i.e., M/s Unique Trading Company, were held on 26.11.2021 and 30.11.2021. The registration of the selling dealer was cancelled on 08.04.2022. The record further shows that GSTR - 1/1FF and GSTR 3-B were also filed, which shows the returns and tax filed by the selling dealer. Once these facts have been brought on record, the State authorities ought to have verified the same, but instead, procee....

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....such evidence should also be made a part of the show cause notice. " 12. On perusal of the aforesaid paragraphs, it is apparent that proceedings under section 74 can only be invoked when there is a fraud, wilfull mis-statement or suppression of fact to evade tax on the part of the taxpayer. Since the benefit of this circular has been given in view of the judgement of the Apex Court in Suraj Impex (India) Private Limited (supra) and the judgement of this Court in S/s Agrawal Rolling Mills (supra), strict compliance of the circular is required by the State authorities. The record shows that no finding has been recorded at any stage that there is a fraud or willful mis-statement or suppression of fact to evade payment of tax. 13. The record ....