Lack of Proof and E-Way Bills Leads to Denial of ITC Claim: Madras HC Dismisses Petition [Read Order]
The Court noted that despite being granted time to provide necessary documents, the petitioners failed to establish that the suppliers had paid tax and filed returns, as required under GST law
![Lack of Proof and E-Way Bills Leads to Denial of ITC Claim: Madras HC Dismisses Petition [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/05/Madras-High-Court-E-Way-Bills-ITC-TAXSCAN.jpg "Lack of Proof and E-Way Bills Leads to Denial of ITC Claim: Madras HC Dismisses Petition [Read Order]")
The High Court of Madras,upheld the denial of input tax credit (ITC) for the petitioner due to the lack of proof of actual supply and absence of e-way bills. Devi Traders,petitioner-assessee,challenged the ITC recovery, stating they weren’t allowed to cross-examine the suppliers, Charles and Shanthi. They claimed the goods were delivered using the suppliers' own vehicles and that...
The High Court of Madras,upheld the denial of input tax credit (ITC) for the petitioner due to the lack of proof of actual supply and absence of e-way bills.
Devi Traders,petitioner-assessee,challenged the ITC recovery, stating they weren’t allowed to cross-examine the suppliers, Charles and Shanthi. They claimed the goods were delivered using the suppliers' own vehicles and that assessment orders were already passed against the suppliers, so recovery from them would lead to double taxation.
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The Department said Charles had passed away , so cross-examination wasn’t possible. It argued that the petitioner failed to prove the ITC claim, the suppliers had not paid tax, and there were no e-Way Bills. It also pointed out that Goods and Services Tax Return (GSTR) filings alone did not prove genuine transactions and that the petitioner had an alternate remedy through appeal.
A single member bench of Justice C.Saravanan noted this was the second round of litigation. In the first round, assessment orders were quashed, and fresh proceedings were directed with a chance for the petitioners to cross-examine Charles and Shanthi.
In the fresh round, the Department denied input tax credit, alleging no actual supply of goods. Summons to Charles and Shanthi failed, and while the Department claimed Charles had died, no proof was provided.
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The Court observed that one supplier’s Goods and Service Tax (GST) registration had been cancelled retrospectively. Petitioners cited earlier favourable rulings, but the bench referred to newer decisions requiring buyers to prove actual movement of goods to claim credit.
Despite being given time, the petitioners failed to provide documents such as e-way bills or proof of receipt of goods. Although e-way bills were not required for certain intra-state supplies under a 2018 Tamil Nadu notification, rubber and rubber sheets were excluded from this exemption.
Under GST law, to claim ITC, the recipient had to have a valid invoice, receive goods, ensure the supplier paid tax and filed returns, and make payment within 180 days. Failure to meet these conditions required reversal of ITC with interest.
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The Court held that the Department followed proper procedure and that the burden was on the petitioners to prove receipt of goods. As they failed to do so, the ITC was rightly denied.
It also ruled that cross-examination of Charles and Shanthi was not necessary, as their statements were recorded in the presence of the petitioners.
The High Court dismissed the petitions but allowed the petitioners to file appeals before the Appellate Authority within 30 days.
To Read the full text of the Order CLICK HERE
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