The Allahabad High court ruled that Freight charges, delivery acknowledgement, and toll receipts and the payments thereof required to prove physical movement of goods. The court refused to interfere in the orders issued by the GST ( Goods and Services Tax ) department as the petitioner failed to submit these documents and GSTR 2A Filing.
The bench of Justice Piyush Agarwal found that the petitioner failed to provide essential documents such as freight charges, delivery acknowledgements, and toll receipts, which are critical to verify the physical movement of goods and the genuineness of the transactions.
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The petitioner, M/s Anil Rice Mill, a proprietorship firm dealing in peanut, galla, and paddy, faced GST-related scrutiny for the financial year 2020-21. The GST department issued a show cause notice under Section 74 of the GST Act for the months of June through September 2020, alleging incorrect ITC claims amounting to ₹20,31,775, with an equal penalty imposed. Despite submitting a reply, the petitioner’s appeal was rejected, leading to the current writ petition.
It was argued that despite making payments through proper invoices and banking channels, the GST department refused to accept these documents. It claimed that the responsibility for ensuring the seller’s tax compliance should not fall on them, and that denying ITC benefits due to the seller’s non-compliance constitutes double taxation, contrary to the GST regime’s objectives. The petitioner also relied on previous judgments to support their case, asserting that the ITC should not be denied if the tax was duly paid.
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The bench referred to the decision in Commissioner Commercial Tax Vs. M/s Ramway Foods Ltd, where it was ruled that the primary responsibility lies with the dealer to establish the actual movement and genuineness of transactions to avail ITC. Without these proofs, the benefit of ITC cannot be granted.
The court upheld that under Section 16 and Section 74 of the GST Act, the burden of proving the actual physical movement of goods rests on the dealer. Mere submission of tax invoices, e-way bills, and payment proofs through banking channels is insufficient if these additional proofs are lacking.
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Consequently, the Allahabad High Court dismissed the writ petition, refusing to interfere with the GST orders contested before the court.
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