In a significant ruling the Allahabad High Court ruled that the burden is on the assessee to prove genuineness of transaction beyond doubt for claiming input tax credit (ITC) under the Uttar Pradesh Goods and Service Tax Act (UPGST), 2017.
By means of this writ petition, the petitioner, M/S Malik Traders, assailed the order passed by the Commercial Tax Officer, Sector 2 Meerut by which the proceedings of Section 74 of UP GST Act were initiated demanding Rs. 12,32,148/- as wrong availment of input tax credit which was confirmed by the impugned order passed by Additional Commissioner.
The counsel for the petitioner has submitted that petitioner has purchased the goods / scrap from various parties through tax invoices for which e-way bills were also generated. The said goods were transported through trucks along with bilties and payments were made through cheques or RTGS / NEFT. On the basis of selling dealer having not shown the said purchases in its return or not deposited tax, the action cannot be taken against the petitioner. He further submitted that if the selling dealer have not paid the tax / deposited the tax with the Government, the benefit of input tax credit cannot be denied to the petitioner.
It was argued that the benefit of tax credit in the GST regime is being brought with intention to avoid cascading effect and once the tax has been charged on the bill and paid by the petitioner through banking channel, the benefit of input tax credit cannot be denied, legally.
The counsel further submitted that petitioner has rightly discharged its tax liability by paying the tax charged on the bills raised by the selling dealer and if the selling dealer have not deposited the tax so charged from the petitioner, the selling dealer shall be penalized and not the petitioner. It has been further argued by the petitioner that in the event the amount of input tax credit claimed by the petitioner is being recovered that would amount to double taxation, which is not the spirit of G.S.T. regime.
The counsel for the respondent supported the impugned orders and submitted that under Section 16 of UP GST Act it has been provided that input tax credit can be availed with certain conditions stipulated therein, in the event of non-fulfilment of such conditions as enumerated therein, the benefit of input tax credit cannot be accorded.
It was further submitted that without actual physical movement of goods or genuineness of transaction, the input tax credit cannot be availed. He further submitted that for availment of input tax credit, the petitioner is duty bound to prove beyond any reasonable doubt and establish that actual transaction took place and merely furnishing the details of tax invoices, e-way bills, GR is not sufficient.
A Single Bench of Justice Piyush Agrawal observed that “In the case in hand, the petitioner has only brought on record the tax invoices, e-way bills, GR and payment through banking channel, but no such details such as payment of freight charges, acknowledgement of taking delivery of goods, toll receipts and payment thereof has been provided. Thus in the absence of these documents, the actual physical movement of goods and genuineness of transportation as well as transaction cannot be established and in such circumstances, further no proof of filing of GSTR 2 A has been brought on record, the proceeding has rightly been initiated against the petitioner.”
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