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Assessee denied ITC due to alleged fake invoices; Madras High Court mandates documentary evidence from the Department for fair reassessment.
Judgment based on Section 16(2)(b)
Compiled by: Raja Abhishek, NIRC Candidate 2024
Facts of the Case 📅:
• The Assessee availed Input Tax Credit (ITC) on supplies received from one Supplier.
• A show-cause notice was issued on 9 August 2023, alleging non-entitlement to ITC due to the supplier's non-existence.
• Assessee responded on 8th Nov 2023, providing tax invoices, bank statements, e-way bills, and GSTR 2A to prove the genuineness of the supply.
• Assessment order dated 7th March 2024 denied ITC, leading to the filing of this writ petition.
Issue ❓:
Is the denial of ITC to the Assessee, based on the alleged non-existence of the supplier and absence of documents proving the movement of goods, justified?
Argument by the Assessee 💼:
The Assessee argued that they had provided all necessary documents, including tax invoices, bank statements, e-way bills, and that the supplies were reflected in GSTR 2A.
They contended that ITC cannot be denied when all these conditions are satisfied
Department's Argument 🏛️:
Deptt. asserted that Assessee has the burden of proof to establish the entitlement to ITC, including proving the actual movement of goods & argued that without lorry receipts or weighment slips, the Assessee failed to meet the requirements of S.16(2)(b).
Precedent Analysis 📚:
DY Beathal Enterprises vs. State Tax Officer (Writ Petn. (MD) No. 2127 of 2021, order dated 24th Feb 2021): Affirmed the need for documentary evidence to prove the genuineness of transactions and entitlement to ITC.
Judgment ⚖️:
The Court set aside the impugned order dated 7th March 2024, stating that the Department failed to provide documentary evidence to support the conclusion that the supplier issued fake invoices.
The Court directed the Department to provide the necessary documents to the Assessee and allowed the Assessee to respond.
The Assessee is required to remit 20% of the disputed tax demand, and the Department must issue a fresh order after considering the Assessee's response.
Title: TVL. S.S. METALS VS. STATE TAX OFFICER
Court: Madras High Court
Citation: Writ Petn. No. 15381 of 2024 & Writ Misc. Petn. Nos. 16714 & 16718 of 2024
Dated: 24-Jun-2024
Impact Analysis 💡:
This judgment reinforces the need for the Department to provide concrete evidence before denying ITC and ensures that Assessees are given a fair opportunity to respond to allegations.