TaxTMI 
TaxTMI 
No Documents, No Exemption: Evidence Withheld Is Presumed Unfavourable
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....o Documents, No Exemption: Evidence Withheld Is Presumed Unfavourable<br>By: - Kamal Aggarwal<br>Goods and Services Tax - GST<br>Dated:- 28-9-2026<br>A taxpayer who wins the question of law can still lose the appeal on the question of fact. A strong legal ground does not win an exemption claim on its own. The recent order of the GST Appellate Tribunal in Jana Small Finance Bank Limited Versus Shri Pushpendra Kumar Meena, Commissioner (State GST) Chhattisgarh. - 2026 (9) TMI 1655 - GSTAT RAIPUR is a clear reminder of this. The Tribunal accepted the Appellant's reading of the exemption notification, yet dismissed the appeal because the supporting documents were never placed on record. The dispute The Appellant repo....
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....rted unreconciled turnover in Table 7G of Form GSTR-9C for July 2017 to March 2018. The proper officer treated the entire unreconciled amount as taxable and confirmed a demand of tax along with interest and penalty. The first appeal filed by the taxpayer was dismissed. The Appellant's case was that almost the entire unreconciled amount represented interest-related adjustments recorded at the entity level and attributable to other States, such as claw-back interest reversals on NPAs and interest reversals on securitisation transactions. It claimed exemption under Entry 27 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The Respondent pointed out that the adjustments were disclosed only at the entity level and that not....
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....hing had been produced to link them to the Chhattisgarh registration. What the Tribunal held On the question of law, the Tribunal held in favour of the Appellant that interest income falls within Entry 27 (para 9). On the question of fact, it identified what the Appellant had to prove, namely that the amount was interest income, that it related to another State, and that it pertained to the relevant period (para 10). The Tribunal rejected the argument that filing GSTR-9C, a statutory form, was itself sufficient, and held as follows: - "11. ... merely because GSTR-09C is a statutory form does not dispense with the requirement of producing supporting documentary evidence when such evidence is specifically called for by the Departm....
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....ent. The burden lies upon the appellant to substantiate his claim by producing cogent and relevant documentary evidence in order to avail the benefit of the exemption." The Chartered Accountant's certificate was also rejected, because it recorded that documents had been examined but did not state what the examination found or on what documentary basis the claim was verified. Heart of the order Before the Tribunal, the Appellant's representative submitted that since the audit was conducted at the PAN-India level, it was not possible to separate and produce State-wise evidence (para 14). The Tribunal's response to this submission decided the appeal. It held as follows: - "15. Appellant could either produce it before As....
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....sessing Officer or before 1st Appellate Authority but he neither produced before them nor before this Tribunal, therefore an adverse inference can be drawn against him that: - 'The evidence which could be produced but that is not produced, if produced, be unfavourable to the person who withholds it'. [section 114 g of Indian Evidence Act, 1873 now section 119 g of Bhartiya Sakshya Adhiniyam, 2023." Three aspects of this paragraph deserve attention. First, the Tribunal counted the opportunities. The evidence could have been produced before the assessing officer, before the first appellate authority, or before the Tribunal itself. It was produced at none of them. The adverse inference was drawn not from a single lapse but fro....
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....m a consistent failure across three levels of proceedings. Second, the inference turns an absence of evidence into a presumption against the taxpayer. Without para 15, the Appellant's position would simply have been that its claim was unproven. With it, the Tribunal was entitled to presume that the withheld records, if produced, would have shown that the amount was not exempt interest attributable to other States. The PAN-India submission in para 14 did not help; it confirmed that the records needed to support the claim had never been prepared. Third, para 15 is what made the remaining grounds irrelevant. Having drawn the inference, the Tribunal held that the citations on natural justice gave no assistance, and that even if every ....
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....procedural safeguard had been complied with, "the ultimate outcome of the proceedings would not have been different". Once a taxpayer's own evidentiary default is recorded, procedural objections lose most of their force. A small correction for anyone citing the order: the Indian Evidence Act is of 1872, not 1873, and the corresponding provision in the Bharatiya Sakshya Adhiniyam, 2023 is illustration (g) to Section 119. The slip does not affect the reasoning. Our comments The outcome follows settled law. The burden of bringing a case within an exemption notification is on the person claiming it. The Constitution Bench in Commissioner of Customs (Import), Mumbai Versus M/s. Dilip Kumar And Company & Ors. - 2018 (7) TMI 1826....
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.... - Supreme Court (LB), held as follows: - "(1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification." The PAN-India argument was also bound to fail under the GST framework. Section 25(4) of the Central Goods and Services Tax Act, 2017 treats each registration as a distinct person. Each GSTIN files its own returns and its own reconciliation. An entity-level figure that appears in the Chhattisgarh GSTR-9C can only be explained by a GSTIN-wise working. One caution. Para 9 says broadly that "amount of recovery of any interest is exempted", but Entry 27 exempts the service of ....
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....extending deposits, loans or advances only in so far as the consideration is represented by interest or discount. The Revenue's contention that interest reversals are book entries, not consideration, was not decided. The order is therefore not authority on the GST treatment of interest reversals. Practical takeaway • Maintain a GSTIN-wise working for every reconciling item in GSTR-9C, tied to ledgers and, for banks and NBFCs, to borrower accounts. • Respond to the ASMT-10 itself with documents; silence at the first stage colours every later stage. • Attach evidence to the DRC-06 reply. A narrative reply without documents carries little weight. • Obtain a detailed and speaking CA cer....
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....tificate listing the documents examined, the method applied, the amounts verified GSTIN-wise, and a clear conclusion. • Do not treat the appellate stage as a second chance to build the record. As para 15 shows, evidence not produced when it could have been is presumed to be against the party withholding it. =============<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....