M. R. V. Traders Vs Assistant Commissioner (ST)(FAC)
Date: July 8, 2024
Subject Matter
Order remanded as ITC was rejected without verifying invoices, e-way bills
Summary
In the case of M. R. V. Traders Vs Assistant Commissioner (ST)(FAC), the Madras High Court addressed a challenge against an order dated August 17, 2023, which resulted in a rejection of the petitioner’s Input Tax Credit (ITC) claims due to alleged inadequate proof of goods movement. The petitioner contested this order, arguing that the GST Department failed to consider key documents like purchase invoices, e-way bills, and bank statements that evidenced legitimate goods transactions. The court noted that despite the petitioner submitting comprehensive documentation, the GST Department did not sufficiently verify these records, leading to a flawed conclusion regarding the goods' movement. The High Court emphasized adherence to principles of natural justice and the necessity of thorough documentation examination. Consequently, the court set aside the impugned order, conditioned upon the petitioner remitting 10% of the disputed tax demand within fifteen days. It provided the petitioner an opportunity to present further documents and mandated the GST Department to conduct a fresh assessment within three months while allowing for a personal hearing. Bank attachments were also lifted due to the assessment order being set aside.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 17.08.2023 is challenged in this writ petition on the ground of non consideration of the petitioner’s reply. The petitioner received show cause notice dated 02.11.2022 in respect of alleged wrongful availment of Input Tax Credit for purchases from Mahalakshmi Traders, Pollachi. The petitioner replied to such show cause notice on 08.12.2022. Impugned order dated 17.08.2023 was issued thereafter.
2. Learned counsel for the petitioner submits that the petitioner had submitted purchase invoices, e-way bills, bank statements and other documents to establish that the purchase was genuine. Without examining such documents, he submits that Input Tax Credit was reversed. Without prejudice, on instructions, he submits that the petitioner agrees to remit 10% of the disputed tax demand as a condition for remand.
3. Mr. T. N. C. Kaushik, learned Additional Government Pleader, accepts notice for the respondent. He submits that principles of natural justice were complied with by issuing intimation dated 29.09.2022, show cause notice dated 02.11.2022 and by issuing multiple reminders in respect of personal hearing. He also submits that the claim of Input Tax Credit was rejected because the petitioner failed to establish movement of goods.
4. The impugned order refers to the tax payer’s reply to the effect that the purchase bills, transport copies and records for payments were enclosed. Thereafter, the following finding was recorded:
“On verification of records and reply of the tax payer, it has been ascertained that they have not been produced the records for goods movement beyond the doubt, such as, online payment of freight charges, etc. Moreover, it has been proved that Tvl. Mahalakshmi Traders (GSTIN 33BFCPV5507D1ZO) is a bill trader.”
5. The above extract discloses that the respondent did not closely examine the documents submitted by the petitioner, such as invoices, e-way bills, etc. Instead, a conclusion was drawn that the petitioner failed to establish movement of goods. In these circumstances, re-consideration is necessary.
6. For reasons set out above, impugned order dated 17.08.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand as agreed to within fifteen days from the date of receipt of a copy of this order and the matter is remanded for reconsideration. Within the said period, the petitioner is permitted to submit additional documents, if any. Upon receipt of such additional documents and on being satisfied that 10% of the disputed tax demand was received, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of the petitioner’s reply. In view of the assessment order being set aside, the bank attachment is raised.
7. W.P.No.16603 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.18207 and 18208 of 2024 are closed.