Wrongful availment of GST ITC and Fake Invoices: Orissa HC Declines to Enter Disputed Facts, Directs to Avail Alternative Remedy [Read Order]

The Orissa High Court, in its recent ruling, declined to interfere in a writ petition challenging an order under Section 74 of the GST ( Goods and Services Tax ), which demanded ₹34.64 lakh (comprising tax, interest, and penalty) for wrongful availment of Input Tax Credit (ITC) based on alleged fake invoices.

The proceedings arose from transactions during January-March 2024, where the petitioner, M/s. Shreenika Logistics and Trading Company was alleged to have claimed ITC against purchases from three entities, Swastik Trade Ventures, MG Trade and Services, and Navyug Trade and Services, found to be non-existent upon departmental enquiry. The assessing authority concluded that the invoices were fictitious and imposed an equal penalty along with tax and interest.

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Mr. Avijit Patnaik, Advocate, the counsel for the petitioner argued that it had furnished all supporting documents in reply to the show cause notice and that the burden lay on the Revenue to prove that the suppliers were non-existent. It was contended that the findings of fraud were factually erroneous and that genuine transactions had been disregarded.

The Department, however, filed instructions demonstrating that the alleged suppliers were indeed non-existent: the premises of Navyug Trade were closed since inception, the landowner of MG Trade’s premises was deceased for ten years, and the purported landlord of Swastik Trade Ventures denied executing the rent agreement. On these grounds, it was asserted that the ITC claims were based on fabricated documents.

The court, observing that the case involved seriously disputed questions of fact, such as the existence of suppliers and genuineness of invoices, it was held that such factual controversies cannot be adjudicated in writ proceedings under Articles 226 and 227 of the Constitution.

It was stated that the Writ Court is not the forum to re-examine evidence, which falls within the domain of fact-finding authorities under the GST Act.

Accordingly, the High Court declined to interfere with the assessment order and relegated the petitioner to avail the statutory appellate remedy under the GST Act.

The court granted liberty to file an appeal within four weeks, with a direction that the appellate authority should consider the matter pragmatically and expeditiously if approached within the prescribed time.

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