The Allahabad High Court ruled that the primary responsibility of claiming benefit is upon the dealer to prove and establish actual physical movement of goods.
The bench noted that the scheme of input tax credit is being introduced with an object to avoid cascading effect of tax. The purchasing dealer can avail the input tax credit on tax paid on its purchase whereas the manufacturer can avail the same on purchase of its raw material used for manufacturing or selling of its final product which will avoid double taxation.
It was further noted that the benefit of concession / I.T.C. under the tax statute can be availed only on fulfilment of certain conditions or restrictions as stipulated under the Act. In the event of breach of any of the conditions as enumerated under the Act, no benefit can be conferred to the dealer.
The court stated that every registered dealer can claim the benefit of input tax credit only on fulfilment of certain conditions as enumerated under the Act. Section 16 (2) further provides that no registered dealer shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless the conditions mentioned therein is fulfilled.
It was further added that the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful misstatement or suppression of facts empowers to issue notice that tax has not been paid or short paid or erroneously refunded or input tax credit has wrongly been availed or utilized by any reason or wilful misstatement or suppression of fact. Upon adjudication the assessee is required to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice.
The court observed that in the event of wrong availment of input tax credit, the proceedings can be initiated against the registered person or registered dealer but at the same time, restrictions has been imposed upon the authorities that without putting notice to the dealer, no adjudication proceeding can be initiated.
The court noted that the petitioner has only brought on record the tax invoices, e-way bills, 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.
The court relied on the Judgment of the Supreme Court titled as State of Karnataka Vs. M/s Ecom Gill Coffee Trading Private Limited in which it was held that primarily burden of proof for claiming the input tax credit is upon the dealer to furnish the details of selling dealer, vehicle number, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. to prove and establish the actual physical movement of the goods. Further by submitting tax invoice, e-way bill, GR or payment details is not sufficient.
Facts
The petitioner is a proprietorship firm in the name and style of M/s Anil Rice Mill, which is engaged in the business of reselling and purchase of Peanut, Galla and Paddy. Thereafter, the respondents issued a show cause notice under Section 74 of the Goods and Service Tax Act, 2017 for the month of June, July, August and September, 2020-21 to the petitioner for availing wrong input tax credit to which the petitioner submitted his reply, but not being satisfied from the same, the respondent passed the order and imposed the tax upon the petitioner and penalty of equal amount as well, against which the petitioner preferred an appeal, which has also been rejected.
Conclusion
The court while dismissing the appeal observed that the petitioner failed to discharge its onus to prove and establish beyond doubt actual transaction of physical movement of goods as well as genuineness of transaction.
Case Details
Case Name: M/S Anil Rice Mill V/S State Of U.P. And 2 Others
Citation: WRIT TAX No. – 886 of 2023
Court: Allahabad High Court
Judge: Justice Piyush Agrawal
Decision Date: 14/08/2024
