The Allahabad High Court has slammed the GST department for not verifying seller’s tax details on portal before drawing adverse inference.
The bench of Justice Piyush Agrawal has observed that once the seller was registered at the time of the transaction in question, no adverse inference can be drawn against the petitioner-purchaser. The record shows that the registration of the selling dealer was cancelled retrospectively and not from its inception which goes to show that the transaction between petitioner and seller was registered and having valid registration in his favour.
The bench stated that under the GST regime, all details are available in the GST Portal and therefore, authorities ought to have been verified the same as to whether the filing of GSTR-1A and GSTR-3B, how much tax has been deposited by the seller, but the authorities have failed to do so.
Background
The petitioner/assessee is a registered dealer, which is engaged in the business of sale and purchase of scraps etc., against which, proceedings under Section 74 of the UPGST Act were initiated by the respondent for the tax period December, 2018-19, F.Y. 2018-19 vide notice DRC-01 to which a detailed reply was submitted by the petitioner, however, without considering the same, the order was passed in violation of Section 75 (4) of the UPGST/CGST Act.
The petitioner purchased the goods from a registered dealer namely M/s. Radhey International (seller), vide tax invoice, which was generated by the seller from the GST Portal.
The petitioner contended that the authorities have power under the Act for cancelling the registration with retrospective effect, but in the case at hand, the date of transaction in question is of 06.12.2018 and whereas the registration of the selling dealer has been cancelled with effect from 29.01.2020.
The petitioner argued that the transaction is fully covered by the statutory documents prescribed under the Act. Merely at the subsequent stage, if the selling dealer was not found in a disclosed place of business, or registration has been cancelled, the petitioner cannot be held responsible for the same. The selling dealer filed its return therefore, GSTR-2A was auto generated, showing the transactions are genuine.
Conclusion
The allowed the writ petitions and remanded the matter to the authority concerned for deciding afresh by passing a reasoned and speaking order, after hearing all the stakeholder, within a period of two months from the date of production of certified copy of this order.
Case Details
Case Title: M/S Solvi Enterprises Versus Additional Commissioner Grade 2 And Another
Case No.: Writ Tax No. – 1287 Of 2024
Date: 24.03.2025
Counsel For Petitioner: Aditya Pandey
Counsel For Respondent: C.S.C.
