The Allahabad High Court while dismissing the petition said that the benefit of concession / Input Tax Credit (I.T.C) under the tax statute can be availed only on fulfilment of certain conditions or restrictions as stipulated under the Act.
By means of the petition, the petitioner has assailed the order dated 31.01.2023 passed by the Additional Commissioner- Grade- 2 (Appeal-I), Commercial Tax Bareilly as well as the impugned order dated 24.08.2021 passed by the Deputy Commissioner, Commercial Tax, Division-1, Shahjanjhapur.
The facts of the case are that 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 no 3 passed the order dated 24.08.2021 and imposed the tax upon the petitioner, amounting to Rs 20,31,775/- and penalty of equal amount as well, against which the petitioner preferred an appeal, which has also been rejected by the order dated 31.01.2023.
Counsel for the petitioner submitted that the petitioner after due purchase of goods through proper invoice, made the payment through banking channel.
He further submitted that on the basis that the selling dealer has not shown the said purchases in its returns or not deposited tax, the action cannot be taken against the petitioner.
He also submitted that being a purchaser, the petitioner cleared the bill, in which tax was charged, therefore, the benefit of input tax credit cannot legally be denied to the petitioner.
He said that the input tax credit under the GST regime is being brought with intention to avoid cascading effect and once the tax has been charged on the bill, which was paid by the petitioner through a banking channel, the benefit of input tax credit cannot legally be denied.
He next submitted that the petitioner has rightly discharged his liability of tax by paying the tax charged on the bills raised by the selling dealer and if the selling dealer has not deposited the tax so charged from the petitioner, the selling dealer shall be penalized and not the petitioner.
He further said that in the event, the amount of input tax credit, rightly claimed by the petitioner, is being recovered that would amount to double taxation, which is not the spirit of the GST regime.
Admittedly, the scheme of input tax credit is being introduced with an objective 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. 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 said.
The Court observed that,
In the case in hand, 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.
In the said judgement the Apex Court has 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, submitting tax invoice, e-way bill, GR or payment details is not sufficient.
Similarly, the Court in the case of the Commissioner Commercial Tax Vs M/s Ramway Foods Ltd (supra) has held that the primary responsibility of claiming the benefit is upon the dealer to prove and establish the actual physical movement of goods, genuineness of transactions, etc and if the dealer fails to prove the actual physical movement of goods, the benefit cannot be granted.
The Court while dismissing the Writ Tax (M/s Shiv Trading Vs State of U.P and 2 others), decided on 28.11.2023 justified the proceedings initiated under Section 74 of U.P.G.S.T Act as the petitioner thereof failed to discharge its onus to prove and establish beyond doubt actual transaction of physical movement of goods as well as genuineness of transaction.
Against the said judgment the petitioner therein preferred an Special Leave to Appeal before the Apex Court, which has been dismissed by order dated 12.02.2024.
In view of the facts as stated above, no interference is called for by the Court in the impugned orders, the Court further observed while dismissing the petition.