TaxTMI 
TaxTMI 
2026 (6) TMI 743
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....nts. 3. The Petitioner is before this court against the impugned order dated 18.02.2026 whereby the proposal in Show Cause Notice in DRC 01 dated 14.11.2025 has been confirmed. The challenge to the impugned proceedings are two fold 1) jurisdictional theme and 2) jurisdictional facts. 4. It is submitted that although 10 defects were pointed out in the impugned Show Cause Notice dated 14.11.2025, proposals in respect of 9 of the defects pointed out in the said show cause notice has been dropped and only in respect of one of defects namely defect No.10, demand has been confirmed and it pertains to Bill Trading Activity. 5. It is the case of the petitioner that the petitioner had purchased the consignments of Cotton yarn from a supplie....
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....y genuine documents, including: * Tax Invoices containing all particulars as per Rule 46 of the CGST Rules, 2017, * E-way bills (where applicable) generated under Rule 138, * Proof of payment through banking channels (RTGS/NEFT/cheque), * Receipt of goods verified through goods inward register, stock records, and consumption reports. This clearly establishes that actual movement of goods and consideration payment togh 0 BU जयते place - satisfying the conditions of a valid "supply" under Section 7 of the CGST Act, 2017. COPY GST compliance of Supplier We have also verified from the GST portal that the supplier has: * Filed GSTR-1 returns declaring....
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....justification in imposition of penalty under Section 122(1) (vii) of the respective GST. Enactments. 8. The observations of the respondent in the impugned order are as follows:- Findings of the Proper Officer: On verification of records for the assessment year 2023-24, it is observed that the taxpayer had effected inward supplies from certain suppliers who were identified by the department as bill traders, based on intelligence inputs and verification of the supplier list maintained by the Intelligence Wing. Though the name of the taxpayer does not appear in the list of direct beneficiaries, it is noticed that the taxpayer had made inward supplies from suppliers who were found to be issuing invoices without actual suppl....
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....ation of the Reply The reply filed by the taxpayer has been carefully examined. While it is not disputed that the suppliers were registered under GST and that invoices were reflected in GSTR-2A / 2B, it is observed that mere possession of tax invoices, reflection in returns, generation of e-way bills, and payment through banking channels do not, by themselves, conclusively establish the genuineness of supply, particularly in cases involving identified bill traders. It is a settled position that bill-trading operations are often carried out with complete documentation, including invoices, e-way bills, and banking transactions, without actual movement of goods. Therefore, documentary compliance alonc cannot be equated with p....
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....he list of direct beneficiaries, it was noticed that the petitioner had made inward supplies from the said supplier who was found to be issuing invoices without actual supply of goods. 10. Today when the case was taken up for hearing, learned counsel for the Petitioner sought to demonstrate that seven e-invoices which were issued to the petitioner had also accompanied a lorry receipt which accompanied the goods supplied by the said supplier. The reply of the petitioner in DRC 06 dated 05.02.2026 has not referred to the lorry receipt. 11. The petitioner appears to made out a prima facie case on merits as far as physical movements of the goods as the petitioner is also able to establish that each of the tax invoices accompanied e-way bi....