GST Dept Imposes ITC Liability, Rejects Goods Movement Despite Documents: Allahabad HC Orders Reconsideration [Read Order]

The Allahabad High Court ordered reconsideration on matters where the GST ( Goods and Services Tax ) department imposed ITC ( Input Tax Credit ) liability rejecting the goods movement despite submission of documents such as gate passes, invoices..etc.

The assessee, M/s Agra Oil And General Industries Limited filed writ tax before the high court, challenging the action of imposing ITC liability rejecting the movement of goods despite document submission.

While challenging the impugned action, the assessee - petitioner’s counsel, Shubham Agrawal submitted that the first order under Section 74 of the GST Act, 2017, mentioned that the petitioner had submitted 8 tax invoices, six biltis (GR), 8 copies of gate passes issued by the concerned Mandi Samiti, 8 copies of Form No. 9 issued by the Mandi Samiti, and various other documents.

Despite these submissions, the GST officer concluded that the documents did not establish the movement of goods, thereby imposing an Input Tax Credit ( ITC ) liability on the petitioner.

The counsel relied upon an order dated December 12, 2023, passed by a coordinate bench of this Court, where it influenced by the views taken in previous cases such as M/S Kent Cables, M/S Tulsi Steels, and M/S Nandan Sales Corporation, directed the assessee to deposit only 20% of the disputed tax liability in addition to an earlier 10% deposit before the assessing authority. This deposit was to ensure that the recovery proceedings for the balance amount would remain until the writ petition was decided.

The counsel also cited another order dated January 2, 2024, in Writ Tax No. 1436 of 2023 (M/S N.G. Enterprises and another Vs. State of U.P. and 3 others), to support their case.

The High Court bench of Justice Kshitij Shailendra acknowledged the matter required consideration and directed the respondents to file a counter affidavit within four weeks, with a rejoinder affidavit, if any, to be filed within two weeks thereafter.

The Court ordered that the assessee must deposit an additional 20% of the disputed tax liability within four weeks. Subject to this deposit, the recovery proceedings for the remaining amount would be stayed until the writ petition was finalised.

It further stipulated that non-compliance with this order would result in the automatic vacation of the interim protection, allowing the recovery proceedings to proceed. The case was scheduled to be listed before the appropriate Bench in the third week of October 2024, with the note that it would not be treated as tied up or part heard with this Bench.

Arvind Mishra, standing counsel appeared for the respondent.

To Read the full text of the Order CLICK HERE

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