TaxTMI 
TaxTMI 
2026 (9) TMI 287
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....ailment of ITC in GSTR-3B as compared to actual ITC available in GSTR-2A during the period from 2018-19 to 2022-23 violating the provision of Section 16(2)(a) and Section 16(2)(C) of the said Act, read with Rule 36 of the Central Goods and Service Tax Rules, 2017, which is required to be recovered/reversed under Section 73 of the said Act along with applicable interest and penalty under Section 50 and Section 73 of the said Act. ii. Have availed and utilized ineligible ITC to the tune of Rs. 43,44,046/- (Rupees Forty Three Lakh Forty Four Thousand Forty Six Only) (CGST-Rs.21,72,023/- & SGST-Rs. 21,72,023/-) by way of availment of ITC in GSTR-3B on the basis of fake invoice issued by the non-existent entity during the period from 2017-18 to 2023-24 (Upto Nov'23) violating the provision of Section 16 of the said Act, read with Rule 36 of the Central Goods and Services Tax Rules, 2017, which is required to be recovered/reversed under Section 74 of the said Act along with applicable interest and penalty under Section 50 and Section 74 of the said Act iii. have made short payment of Rs. 6,45,910/- (CGST-Rs. 3,22,955/-& SGST-Rs. 3,22,955) by suppressing taxable valu....
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....0.85 147240.85 294481.7 6 MITWA MALLICK 19BNUPM9630A1ZM 6176S3.2 0 55588.79 55S88.79 1 11177.6 7 SOUMEN BAG 19BZVPB00d9M1ZW 2550964 0 229586.76 229586.76 459173.5 8 BIRJU CHOWDHURY 19CHOPC9373D170 2553766 0 229838.94 229838.94 459677.9 9 DIPALI ROY 19CTCPR2848N1ZX 261639 0 23547.51 23547.51 47095.02 10 BABLU PASWAN 19DEPPP1313P1ZU 888812.8 0 78118.15 78118.15 156236.3 11 PANCHU MAITY 19DSIPM3574A1ZN 679060 0 61115.4 61115.4 122230.8 12 BHADRESHWAR BAG 19ETMPB3981A1ZO 2263305.13 0 203697.47 203697.47 407394.9 13 RAJESH HELA 19AZQPH0046Q1ZV 30189 30189 60378 Total 2172022.9 2172022.9 4344046 [5]. It would be appropriate to quote the reply of the taxpayer to this demand in his own words which is as under : In context of allegation, the following facts are mentioned: 1. We have verified the GSTIN of every taxpayer mentioned at the time of procuring supply and after being found active we procured supply fro....
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....inward supply of goods and services. Allegedly, the taxpayer in his returns made short payment of a sum of Rs. 6,45,910/- and as such the said amount along with penalty and applicable interest was recoverable from him. The taxpayer, in response, claimed that he incurred expenses towards convenance charges, hiring of labourers etc. on RCM basis which does not come within the purview of taxable services. The taxpayer further claimed that he also incurred cost towards freight, travel expenses and expenses for hiring the professional services of Chartered Accountants which were not also taxable in terms of RCM. In his reply, the taxpayer filed details of such expenses incurred by him. [7]. The Revenue did not accept his reply and consequently the matter was taken up by the adjudicating authority for adjudication. The taxpayer was given opportunity of hearing. His personal hearing was held on 04/03/2024 in presence of one of the partners of the taxpayer. The adjudicating authority in paragraph 11 of the Order-in-Original (in short OIO) has recorded that despite notice, the taxpayer did not submit the required documents in the course of personal hearing. [8]. Upon adjudication of t....
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....he CGST Act and order for recovery of the confirmed amount under Section 74(9) of the CGST Act. ii) I drop the demand of Rs. 1,14,934/- (Rupees one lakh fourteen thousand nine hundred thirty four only (CGST- Rs.57,467/ SGST- Rs. 57,467/-)] as discussed in Para 8.4(c)(ii) above. iii) I order for payment of interest at an appropriate rate on the demand confirmed in Sl no. C(i) above as per section 50(3) of the CGST Act, in terms of Section 74(9) of the CGST Act. iv) I impose penalty to the tune of Rs. 5,30,976/- (Rupees five lakh thirty thousand nine hundred seventy six only (CGST-Rs.2,65,488/- + SGST- Rs. 2,65,488/-)] in terms of section 74(9) of CGST Act. 12. This order is passed without prejudice to any other Action which may be taken against the Noticee under any other law for the time being in force." [9]. The aggrieved taxpayer filed an appeal before the first appellate authority in terms of Section 107 of the CGST Act, 2017. The taxpayer besides presenting the facts and supporting documents before the first appellate authority raised several questions of law which were as under: i) The Revenue should not have invoked Section 74 o....
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.... the registration of the suppliers who issued the invoices was cancelled with effect from retrospective date and, therefore, on the dates of supply they were not registered under the GST Act which made the taxpayer ineligible for filing ITC based on the invoices issued by those suppliers. The first appellate authority viewed that since the Revenue could not prove any active connivance between the suppliers and taxpayer for availing ITC based on the invoices issued by them, Section 74 of the CGST Act, 2017 was not applicable in this case. The appellate authority viewed that in the given fact situation, excess ITC availed by the taxpayer should have been demanded by issuing notice in terms of Section 73 of the CGST Act, 2017 in absence of any proof of fraud, wilful misstatement of facts or suppression of facts to evade tax. [13]. As regards the third demand against the taxpayer of Rs. 6,45,910/-for evasion of tax by suppressing taxable value of Rs.35,88,910/- of inward supply of goods and services during the period from 2017-2023, the first appellate authority after examination of the relevant returns and documents of the taxpayer came to the conclusion that the demand against the....
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....I therefore - (i) Confirm Rs. 1,93,812 (Rs.4,208/-IGST and Rs.94,802/- each under the head CGST and SGST) under Section 73 of the CGST/SGST Act, 2017 along with applicable interest and penalty for mis-match of ITC availed in GSTR-3B and available in GSTR-2A; They had reversed the ITC vide DRC-03 dated 26/3/2025 which may be appropriated against the demand; (ii) Confirm demand of Rs. 43,44,046/- [CGST & SGST] under Section 73 of the Acts ibid along with applicable interest and penalty; (iii) Confirm the demand of Rs.10236/- [CGST] and Rs. 10236/-[SGST] against RCM under Section 73 of the CGST/SGST Act, 2017 along with applicable interest and penalty. (iv) The impugned order issued by the respondent is modified accordingly. [15]. The Revenue has assailed the said OIA before us under sub-section (3) of Section 112 of the CGST Act, 2017 mainly on the following grounds: i) The findings of the appellate authority that Section 74 of the CGST Act, 2017 is not applicable in the case is not correct because a thorough investigation undertaken by the revenue revealed that the taxpayer availed and utilized fake ITC on the basis of the invoices gen....
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.... to avail the ITC based on fake invoices. iv) Retrospective cancellation of 13 suppliers by revenue does not establish taxpayer's knowledge or complicity. v) There is no merit in the contention of the revenue that the first appellate authority exceeded its jurisdiction by determining the liability of the taxpayer itself without issuing the direction to the proper officer as per requirement of law laid down under Section 75 (2) & (3) of the CGST Act, 2017 because the appellate authority is empowered to modify the amount of tax determined by the proper officer. vi) The burden of proof cast upon the taxpayer to prove that he is eligible for ITC cannot be read as a presumption of fraudulent intention in absence of such proof. vii) Reversal of ITC for a sum of Rs.60,378/- by the taxpayer cannot be treated as an admission of his guilt. viii) For a claim under the Reverse Charge Mechanism (RCM), Section 74 of the CGST Act, 2017 cannot be invoked. Under the premises aforesaid, the taxpayer has sought for dismissal of the present appeal. [17] We have heard Ms. Tanu Das, Superintendent CGST, who represented the appellant. Ms. Das vehemently ....
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....al before the tribunal. He urges for dismissal of this appeal. [19] We have already discussed in the preceding paragraphs that the Revenue attributed three demands to the taxpayer through the show cause-cum-demand notice dated 08.01.2024. At the cost of repetition, it would be appropriate to recapitulate the said demands at this place for the sake of clarity and convenience. The first demand relates to availment and utilization of excess ITC to the tune of Rs. 20,92,513/- by the taxpayer. As regards this demand, the first appellate authority after making a comparison between GSTR-3B and GSTR-2A and on perusal of the invoice and returns of the taxpayer confirmed the demand by modifying and reducing it to a sum of Rs. 1,93,812/- along with applicable interest and penalty. The first appellate authority viewed that rest of the amount was reversed by the taxpayer vide DRC-03 dated 26.03.2025. The second demand relates to availment and utilization of ITC of a sum of Rs. 43,44,046/- by the taxpayer on the basis of fake invoice issued by as many as 13 number of non-existent suppliers during the period from 2017 to 23.11.2023 for which the revenue invoked Section 74 of CGST Act,2017 on t....
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....0 amounting to Rs. 84,565/- under each of CGST & SGST was admitted by the appellant and they reversed the dues vide DRC-03 under ARN No. AD190325046585T dated 26/3/25 for the above amount without payment of interest and penalty. In 2020-21, I find no excess availment of ITC as per the available data. In 2021-22, I find, the appellant availed excess ITC of Rs. 4208/-[IGST] Rs. 195236/-(each under CGST & SGST]. I find the Adjudicating Authority accepted a payment of Rs.185000/- (under each of CGST & SGST] along with interest of Rs.3000/- each vide DRC-03 under ARN No. AD190222005350R dated 19/2/2022. The payment was made prior to issuance of SCN. The balance amount of Rs.4208/- [IGST] Rs.10,237/-each under CGST & SGST was paid by the appellant on 26/3/2025 vide DRC-03 No. AD190325046634Y. They did not pay any interest and penalty thereon. I find no excess availment of ITC in the FY 2022-23. [21] It appears to us that the first appellate authority has dealt with the matter elaborately and after a meticulous comparison between GSTR-2A and GSTR-3B and DRC-03 uploaded by the taxpayer, the appellate authority computed the liabilities of the taxpayer. This apa....
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....the labour/ employees/ workers. Such expenses are not taxable on RCM basis. The demand was Rs. 88570/- (CGST + SGST]. 6.11. Some expenses were incurred by the appellant against freight. They submitted relevant documents like part of GSTR-2A, ledger for freight expenses etc. I find M/s TCI Express Ltd., National Carrying Corporation charged the freight on FCM. Such tax of 12140/- on FCM is not payable by the appellant. The remaining demand of RCM on freight pertained to pre-GST period amounting to Rs. 1734/- is not payable. They also submitted that, they paid Rs.1090/ in FY 2020-21 in GSTR-3B. Remaining amount of Rs. 20472/- is payable by the appellant. 6.12. In legal charges, I find that, they paid the amount to chartered accountant for various related works which I find is not taxable under RCM. The demand was for Rs. 7060/-which did not have any ground. 6.13. In case of travelling expenses, I find that, they travelled by rail and the relevant tickets were submitted by them. These are not taxable in the hand of the appellant. The demand amount was Rs. 399,910/-. I find in the entire demand of Rs. 530,976/-they are to pay Rs.10236/- & 10236/- (under CGST ....
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....e first appellate authority that Section 74, CGST Act, 2017 cannot be invoked for enforcement of this demand. [27] As regards the demand of Rs. 43,44,046/- for availment and utilization of ITC based on fake invoice issued by the non-existent suppliers, the first appellate authority confirmed the said demand but it was of the view that the Revenue should not have been invoked Section 74 of the CGST Act, 2017, for enforcement of this demand since no fraud or any wilful mis-statement or suppression of facts as contemplated under Section 74, CGST Act, 2017 has been proved against the taxpayer. The first appellate authority, therefore, confirmed the demand of Rs. 43,44,046/- along with applicable interest and penalty payable in terms of Section 73 of the CGST Act, 2017. As already discussed by us in the forgoing Paragraphs, both the parties have advanced arguments and counter arguments on this issue. [28] Apparently, the appellant before us is the Revenue. In so far as the order of the first appellate authority confirming the demand of Rs. 43,44,046 [CGST & SGST] is concerned, the tax payer does not challenge the order. As discussed, the first appellate authority held that notice ....
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.... so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice." [33] Thus, Section 74 (1), CGST Act 2017, quoted herein above, in its plain terms clearly contemplates that a notice under Section 74 (1), CGST Act 2017 shall be served where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax. [34] As we have already discussed in the preceding paragraphs, the revenue in this case has vehemently argued that the 13 number of suppliers in whose name the tax payer generated the invoice were fake and non-existent which was in the knowledge of the tax payer who availed and utilised a huge amount of ITC on the basis of such fake invoices and as such the demand notice was served on the tax payer under Section ....
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....on the purchasing dealer claiming such ITC. Burden of proof that the ITC claim is correct is squarely upon the assessee who has to discharge the said burden. Merely because the dealer claiming such ITC claims that he is a bona fide purchaser is not enough and sufficient. The burden of proving the correctness of ITC remains upon the dealer claiming such ITC. Such a burden of proof cannot get shifted on the revenue. Mere production of the invoices or the payment made by cheques is not enough and cannot be said to be discharging the burden of proof cast under section 70 of the KVAT Act, 2003. The dealer claiming ITC has to prove beyond doubt the actual transaction which can be proved by furnishing the name and address of 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 aforesaid information would be in addition to tax invoices, particulars of payment etc. In fact, if a dealer claims Input Tax Credit on purchases, such dealer/purchaser shall have to prove and establish the actual physical movement of goods, genuineness of transactions by furnis....
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.... in Paragraphs 2.1 and 2.2 of the SCN has clearly stated as under "2.1 During the course of investigation against M/s Ambika Enterprise (GSTIN- 19AXQPH0046QIZV) by the DGGI, KZU in connection with the fake racket busted by Noida Police, M/s Ambika Enterprise was found to be non-existent at their principal place of business and had passed on irregular/ inadmissible ITC. It appears from the GSTR-1 M of M/s Ambika Enterprise that M/s Jay Technical Services has availed ITC to the tune of Rs 60,378/- (CGST- Rs 30,189/- and SGST Rs 30,189/-) on the basis of fake invoice issued by M/s Ambika Enterprise. 2.2 Accordingly, on the basis of valid Authorisation of Inspection issued by the competent authority, verification was done at the principal place of business of the said notice at 26/1/1b, Strand Road, Burabazar, Kolkata, West Bengal- 700001 by a group of officers of Anti-Evasion on 31.10.2013. On reaching the said address, the officer met Mr. Niraj Sharma, husband of Smt. Namrata Sharma, (one of the partners of the said noticee). A spot summons was issued to the said noticee and statement of Shri. Sourav Dolui, accountant/ authorised representative of the firm was recor....
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....he tax payer clearly demonstrates that he deliberately defrauded the revenue for taking ineligible ITC. There is, therefore, no illegality in serving notice under Section 74, CGST Act, 2017 on the tax payer for enforcement of the demand of Rs 43,44,046/- along with applicable interest and penalty in terms of Section 74, CGST Act, 2017. [45] We also need to address the issue raised by the tax payer as to whether a consolidated notice for multiple financial years can be issued under Section 74 of the CGST Act, 2017. Similar issue arose before the Hon'ble Delhi High Court in the case of Ambika Traders vs Additional Commissioner, Adjudication, DGGSTI, CGST, Delhi North reported in [2025] 148 GSTR1 (Delhi) and the Hon'ble High Court was of the following view: "Consolidated SCN for multiple financial years 43. Insofar as the issue of consolidated notice for various financial years is concerned, a perusal of Section 74 of the CGST Act would itself show that at least insofar as fraudulently availed or utilized ITC is concerned, the language used in Section 74(3) of the CGST Act and Section 74(4) of the CGST Act is "for any period" and "for such periods" respectively. T....
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....iod for which the return is required to be furnished" 45. Thus, Sections 74(3), 74(4), 73(3) and 73(4) of the CGST Act use the term "for any period" and "for such periods". This would be in contrast with the language used in Sections 73(10) and 74(10) of the CGST Act where the term "financial year" is used. The said provisions read as under: "73.[...] (10) The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund" "74.[...] 10) The proper officer shall issue the order under sub-section (9) within a period of five years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within five years from the date of erroneous refund." The Legislature is thus, conscious of the fact that insofar as wrongfully availed ITC is concerned, the notice can relate to a period and need not to be for a....